- Hyperliquid recovered strongly despite rising fears surrounding future HYPE token unlocks.
- Short sellers fueled HYPE rally after crowded bearish positions triggered liquidations.
- Growing exchange revenue helped Hyperliquid maintain momentum despite massive valuation concerns.
Hyperliquid continued attracting aggressive buying pressure even as concerns surrounding HYPE token unlocks intensified across the crypto market. The token previously dropped nearly 25% during recent volatility. However, buyers quickly regained control and pushed HYPE above the $63 mark for a new all-time high.
Many investors expected HYPE to weaken further because Hyperliquid still has a large amount of future supply scheduled for release. According to CoinGecko data, the project’s fully diluted valuation is climbing beyond $60 billion despite a much lower circulating supply. That structure often creates heavy selling pressure once additional tokens enter the market.
Consequently, several traders positioned themselves for a prolonged decline. Many crypto projects experienced similar rallies before eventually collapsing under dilution pressure. Nevertheless, Hyperliquid moved in the opposite direction as market confidence strengthened around the platform’s growing business activity.
Besides the price recovery, Hyperliquid continued reporting strong perpetual futures trading volume alongside rising total value locked. The platform also generated substantial fee revenue during the recent rally. Those metrics helped investors view Hyperliquid more like a profitable exchange business rather than a speculative governance token.
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Short Sellers Fuel Hyperliquid Rally Despite Valuation Concerns
Upcoming unlocks involving nearly 10 million HYPE tied to contributor distributions increased market caution earlier this week. Several traders feared those tokens could trigger aggressive selling once released into circulation. Even so, Hyperliquid maintained strong momentum as buyers continued absorbing available supply.
At the same time, bearish positions started building aggressively across derivatives markets. According to Santiment-linked reporting, funding rates turned negative while short positioning became overcrowded during the latest rally. That setup eventually created the conditions for a major short squeeze once HYPE broke above the $50 level.
Source: Tradingview
Open interest also increased significantly during the breakout phase as momentum traders entered the market after HYPE reclaimed key moving averages and broke through resistance near the mid-$40 range. Â Consequently, the rally accelerated quickly as short sellers rushed to close losing positions.
Despite the strong recovery, dilution concerns remain active across the market as millions of HYPE tokens are still expected to unlock over time. Additionally, some analysts believe the token could face a correction following its nearly vertical move during recent sessions.
However, current market behavior suggests traders remain focused on Hyperliquid’s growing revenue generation rather than future supply expansion. For now, strong exchange activity and rising trading demand continue supporting HYPE despite ongoing valuation concerns.
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