Hyperliquid’s native token, HYPE, has seen a burst of fundamental activity, even as its price struggles to regain momentum.
The token recently dipped below the $30 mark but was still up more than 3% on the day at press time. That modest bounce came after a proposal from the Hyper Foundation aimed at reducing HYPE’s circulating supply.
Now, the big question is whether this supply cut will be enough to push prices higher — or if upcoming token unlocks in December will limit any upside.
Hyper Foundation proposes burning 1 billion HYPE
The Hyper Foundation has proposed burning 1 billion HYPE tokens currently held in the Assistance Fund. Validators are expected to signal their governance intentions on December 21, with voting results due on December 24 — the same day staking is set to begin.
At the time of writing, the Assistance Fund holds over 1 billion HYPE tokens, valued at more than $37 billion.
If the proposal passes, it would significantly reduce both total and circulating supply, a move that generally supports a more bullish long-term outlook. Given the sheer size of the burn, the market could experience a supply shock — a situation where reduced supply, combined with rising demand, typically pushes prices higher.
That said, current market conditions don’t yet show strong demand. Both price action and trading activity have been trending downward, suggesting buyers remain cautious.
Can bulls defend the $20 level?
From a technical perspective, HYPE has been breaking below key support levels in line with broader weakness across the crypto market. The token lost the $35 zone — an area that had held firm through at least five prior tests.
After falling to around $27, HYPE was down roughly 56% from its highs and appeared to be drifting toward the critical $20 support level. However, the proposed supply reduction could alter this trajectory.
The $20 area is important both psychologically and technically, as it previously acted as a higher high back in April. If bulls manage to defend this zone, it could mark a potential turning point.
Declining volume signals weak demand
HYPE’s price weakness has been mirrored by a sharp drop in trading activity. Perpetual futures (perps) volume, which once made up 57% of total activity, has fallen to just 16%.
In real terms, trading volume has dropped from a mid-October peak of roughly $30 billion to about $8 billion. Spot volume has also declined sharply, sitting near $200 million after previously exceeding $1.2 billion during HYPE’s rally.
This slowdown in activity suggests waning interest and increasing selling pressure.
Token unlocks could add short-term pressure
While the proposed burn could improve long-term supply dynamics, upcoming token unlocks in December remain a concern.
According to data shared by Ali Charts, another 10 million HYPE tokens are set to enter circulation, bringing the total unlocked since November to 20 million. Although this figure is small compared to the proposed 1 billion token burn, it could still add short-term selling pressure.
Final thoughts
The Hyper Foundation’s proposal to burn 1 billion HYPE tokens marks a major shift in the project’s supply dynamics and could support prices over the longer term. However, HYPE remains under pressure in the short term, with weakening volume and declining price action pointing toward a possible test of the $20 level.
If the supply reduction narrative gains traction, a reversal is possible — but for now, the market appears to be waiting for clearer signs of renewed demand.
