Hyperliquid’s native token HYPE has gone through a turbulent phase after peaking near $50 almost two months ago, followed by a sustained increase in selling pressure. Since that high, HYPE has been trading within a descending channel, eventually printing a local bottom around $22.
At the time of writing, HYPE is trading at $23.94, down 1.39% on the day and nearly 12% over the past week, highlighting the intensity of the current bearish pressure. This prolonged weakness has forced the Hyperliquid ecosystem to take decisive action in an attempt to stabilize the token’s value.
Hyper Foundation Burns 37 Million HYPE Tokens
In a major intervention, the Hyper Foundation approved the burn of 37 million HYPE tokens following a governance vote that received 85% approval based on staked voting power. The burned tokens—valued at over $912 million—were permanently sent to an inaccessible address, effectively removing them from circulation.
Since December 2024, the Hyper Foundation has consistently executed HYPE buybacks, increasing its total holdings from 9.3 million to 37.51 million tokens. On average, the foundation has spent approximately $1.5 million per day repurchasing HYPE. Over the past week alone, it deployed $12.4 million to acquire an additional 498,340 tokens.
This aggressive deflationary strategy aims to absorb selling pressure, reduce circulating supply, and restore market confidence. Historically, token burns and sustained buybacks tend to support price stability—especially when combined with improving demand-side metrics.
Spot Market Activity Shows Early Signs of Strength
Despite continued price weakness, spot market data is beginning to show encouraging signals. Over recent days, HYPE withdrawals from exchanges have consistently exceeded deposits, resulting in a positive spot flow trend.
At the time of reporting, net spot outflows reached approximately $5.1 million, indicating that holders are moving tokens off exchanges rather than preparing to sell. Typically, declining exchange balances reduce immediate sell-side pressure, creating a more favorable environment for price recovery.
This shift suggests that some market participants may be positioning for a medium-term rebound rather than capitulating at current levels.
Is a Strong Recovery Still Possible?
According to analysis by CoinPhoton, the token burn appears to have improved market sentiment, as reflected in momentum indicators such as the Average Bullish Move. For the first time in over two weeks, buying pressure has overtaken selling pressure, with the Average Bullish Move rising to 17, while the Bearish Move has declined to -9.
This shift implies that buyers are gradually regaining control, even though residual selling pressure remains. If this positive momentum persists, HYPE could realistically reclaim the $30 psychological level, with a potential medium-term extension toward $40.
However, risks remain. Should the deflationary measures fail to sustain demand, HYPE could lose its $20 support, opening the door for a deeper retracement toward $19.
Final Outlook
The $912 million token burn represents one of the most aggressive supply-side interventions in recent DeFi history. While it has not yet reversed the broader downtrend, early signs from spot flows and momentum indicators suggest that market sentiment is stabilizing.
Whether HYPE can reach $40 will ultimately depend on the sustainability of demand—not just reduced supply.
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