HYPE Plummets 60% From Peak: Is Hyperliquid’s Aura Fading?

The shine is coming off. Hyperliquid's native token, HYPE, has just carved a brutal 60% dive from its all-time high—a classic crypto gravity check that leaves traders asking what's next.

Anatomy of a Correction

This isn't just a blip. A 60% retracement signals a fundamental shift in market sentiment. The initial euphoria—that 'hyperliquid aura'—has evaporated, replaced by cold, hard price discovery. The chart now tells a story of profit-taking, shaken confidence, and a market reassessing the project's long-term utility beyond the launch hype.

Beyond the Price Feed

Look past the red candles. The real question is what's happening under the hood. Is trading volume drying up? Are developers still shipping? Has a competing protocol siphoned off liquidity? In DeFi, momentum is everything, and a stalled protocol can bleed value faster than a VC unlocks their tokens.

The Road Ahead: Rebuild or Fade?

Recovery isn't impossible, but it's never guaranteed. The team needs to reignite belief—fast. That means more than just roadmap promises; it requires tangible growth in users, total value locked, or a killer new feature that makes the token indispensable again. Otherwise, HYPE risks becoming just another altcoin casualty in a sector with the collective memory of a goldfish—on to the next narrative.

Remember, in crypto, a 60% drop is just a 'healthy correction' until it isn't. Sometimes the market isn't wrong; it's just brutally efficient at separating signal from noise—and vaporware from value.

Technical analysis tools further underline the bearish outlook. Relative Strength Index (RSI) values are stuck around the low 40s, displaying a lack of momentum and purchase strength. The RSI is an indicator of buying or selling pressure in the market. At the same time, the MACD line is still below the signal line, while the histogram confirms the negative momentum of sales. The MACD is a gauge used to compare two moving averages in terms of trend change and momentum strength.

Strong revenue but under token pressure

Notwithstanding the price weakness, the fundamentals are still sound for Hyperliquid. According to the DefiLlama data, the annualized fees are close to $970 million, with protocol revenue of $883 million, with $874 million going back to the token holders.

Market activity has seen a large increase with 30-day perpetual trading volume at $204 billion. The daily open interest notches at $6.8 billion. This reflects intense resource allocation and trader interest. HYPE is highly liquid and engaged relative to the broader decentralized finance (DeFi) sector.

Rise of Hyperliquid competitors

The decentralized perpetuals market is currently navigating through a notable shift with conflicting open interest and trading volumes. According to DefiLlama, Aster leads in total trading activity, handling about $9.16 billion in trades. Hyperliquid comes in second with $8.56 billion. 

However, Hyperliquid stands out when it comes to open interest, at $6.82 billion, showing that traders are keeping bigger, longer-term positions on the platform.

Lighter shows a high volume of $252.9 billion over 30 days but lower open interest at $1.76 billion, suggesting quicker position turnover. EdgeX and ApeX record smaller but consistent figures, pointing to moderate participation. Consequently, Hyperliquid stands out for capital depth, while competitors dominate sheer trading turnover. 

Furthermore, the erosion of market share makes the problem worse. The market dominance of perpetual DEXs reduced from 57% to 16%, while the volumes in the spot market reduced from $1.2 billion to $200 million. 

Token unlocks drive price pressure

Analyst Hanzo on X highlighted the critical factor behind HYPE’s decline. He noted that approximately 9.9 million HYPE enter the market monthly for 24 months, adding $270 million in supply at current prices. While buybacks absorb only $90 million, it still creates $180 million net monthly selling pressure. This “Unlock Death Spiral” overwhelms even strong revenue and community support. 

🚨 $HYPE WILL BE WORTH $1, AND HERE'S WHY:

Everyone keeps asking why HYPE is down ~60% from its ATH in September, when Hyperliquid is legitimately dominating.

They generated $874M in fees this year. $3T+ in volume. Surpassed ethereum and Solana in 30-day fee generation.

Real… pic.twitter.com/xfDvHHjfsI

“The protocol prints money but the unlock schedule means relentless supply pressure regardless of how well the business performs,” Hanzo wrote, adding, “Perpetual DEX dominance dropped from 57% to 16% as competitors like Aster launched incentive campaigns.” 

The analyst further notes that initial unlocks triggered immediate selling. On November 29, the team received 1.75 million tokens, with over 600K sold over the counter. On-chain data shows $2.2 million in dumps shortly after. A whale wallet netted $122 million in profits, causing an immediate 17% drop in price. 

While governance proposals, such as the burning of 37 million tokens, are positive for the community, it does little to mitigate the issue of unlocks. Even active buying back makes the system slightly inflationary. As of now, Hyperliquid continues to see activity, but the ongoing unlocks mean price swings are likely to continue.

Also Read: Robinhood Deploys Over 500 Tokenized Stocks on Arbitrum