Hyperliquid (HYPE) Token Price Has Crashed Despite Network Volume and Market Share Growth

The Hyperliquid token price has crashed in the past few weeks, even as the network's volume jumped and its market share rose. The HYPE price has dropped from $35

The Hyperliquid (HYPE) token price has crashed in the past few weeks even as the network’s volume jumped and its market share rose.

The HYPE price has dropped from $35 in December to $14, leading to a $4.6 billion wipeout as the market cap dropped from over $9 billion to $4.7 billion.

Hyperliquid’s token has crashed because of the ongoing crypto crash, as Bitcoin and most altcoins have dropped. Bitcoin has dropped by 23% from its highest level this year, meaning that it has moved into a bear market. A bear market is defined as a situation where an asset drops by at least 20% from a local top.

HYPE price has crashed from its all-time high because of its current and future dilution, which will continue for a long time. According to CoinMarketCap, there are now 333 million HYPE in circulation against a total supply of 999.9 million tokens. Over 433,000 tokens are usually unlocked each month, a process that will continue until 2028.

Token unlocks are highly dilutive since they increase a token’s supply at a time when the number of buyers is not growing as much.

Moreover, the HYPE price has crashed due to concerns about whether the network can effectively manage a large-scale market crash. As a perpetual DEX platform, Hyperliquid is widely known for its use of leverage. For example, CoinGlass data shows that one whale has placed a $151 million leveraged short trade on Ethereum and has already made over $70 million profit. It is unclear whether it would manage substantial liquidations.

Hyperliquid may also come under legal scrutiny after it was accused of facilitating crime. According to ZachXBT, one of Hyperliquid’s biggest traders has been accused of using stolen funds.

The Bullish Case for HYPE Price

There are a few reasons why the Hyperliquid price will bounce back. Fundamentally, Hyperliquid has continued to grow its market share in the past few months. It has handled over $29 billion in perpetual futures trade in the past seven days, bringing the cumulative total to $1.13 trillion. This gives it a 59% market share in the industry.

Jupiter, the second-biggest player in the sector, handled $4.05 billion in the same period. Other players like ApeX Protocol, Vertex Edge, dYdX, and GMX, which have long dominated the industry, have lost their market share.

The other potential catalyst is that HYPE developers know that the token unlocks are a real issue. As a result, the network has introduced cash burns and token buybacks from the substantial fees it earns. In most cases, the network makes over $4 million a day, of which some of these funds go to buybacks and burning, which reduces the tokens in circulation.

Further, the HYPE price will bounce back as other crypto prices rebound. Such a move will directly impact the HYPE token and the Hyperliquid ecosystem.