Avalanche and Hyperliquid's Post-Fed Earnings Surge: Macro-Driven Momentum in DeFi and Layer-1 Adoption

The September 2025 Federal Reserve rate cut, which reduced the federal funds rate to 4.25%–4.50%, catalyzed a sharp rebound in the cryptocurrency market, with Avalanche (AVAX) and Hyperliquid (HYPE) emerging as standout performers. This analysis explores how macroeconomic tailwinds—specifically, the Fed's dovish pivot—intersected with project-specific developments to drive a surge in DeFi and Layer-1 adoption, reshaping the landscape for institutional and retail investors alike.

Fed Policy as a Catalyst for Risk-On Sentiment

The 25-basis-point reduction marked the first easing cycle in years, signaling a shift from hawkish tightening to accommodative monetary policy. As traditional yields in Treasuries and money market funds contracted, investors flocked to risk assets, including crypto. According to a report by Yahoo Finance, AVAX surged 10.1% to $32.59, while HYPE rose 7.2% to $58.43 within 24 hours of the announcement[Avalanche and Hyperliquid Lead Crypto Rally Post-Fed …]^[1]. This volatility was amplified by the fact that the broader market had already priced in the rate cut, leaving room for project-specific catalysts to dominate price action[Avalanche and Hyperliquid Lead Crypto Rally Post-Fed …]^[1].

The Fed's move also weakened the U.S. dollar, a historical tailwind for crypto. A weaker dollar reduces the opportunity cost of holding non-yielding assets like Bitcoin and altcoins, while boosting demand for DeFi protocols offering higher yields. Phemex analysts noted that DeFi TVL rebounded to $170 billion post-rate cut, erasing losses from the Terra-LUNA collapse and reflecting a maturing market with sustainable capital flows[DeFi TVL Rebounds to $170B, Erasing Terra-Era Bear Market Losses]^[5].

Avalanche's Strategic Positioning: Treasury Expansion and Institutional Onboarding

Avalanche's 10.1% price rally was underpinned by its $1 billion Digital Asset Treasury plan, which aims to stabilize AVAX's value and fund ecosystem growth[Avalanche and Hyperliquid Lead Crypto Rally Post-Fed …]^[1]. This initiative, coupled with Bitwise's proposed AVAX ETF filing, signaled growing institutional confidence in the platform.

Data from Messari's Q1 2025 report reveals that Avalanche's TVL grew by 11% in the months following the rate cut, reaching 38.63 million AVAX by September 18[State of Avalanche Q1 2025 | Messari]^[4]. Daily transactions on the network also rose by 23.6% quarter-over-quarter, driven by high-volume platforms like Pulsar[State of Avalanche Q1 2025 | Messari]^[4]. These metrics highlight Avalanche's role as a DeFi hub, with its EVM-compatible architecture and low fees attracting developers and liquidity providers.

Hyperliquid's Explosive Growth: Hybrid Model and Perp Dominance

Hyperliquid's 7.2% price jump was fueled by its USDH stablecoin and dominance in decentralized perpetual futures trading. By August 2025, the platform captured 75% of the perp DEX market, with weekly trading volumes peaking at $78 billion[Hyperliquid (HYPE): A 126x Opportunity as Institutional Adoption …]^[2]. Its hybrid model—combining decentralized security with centralized usability—appealed to institutions seeking CEX-like speeds without sacrificing on-chain custody[Hyperliquid (HYPE): A 126x Opportunity as Institutional Adoption …]^[2].

Hyperliquid's TVL in HyperEVM surged from $1 billion to $2.08 billion in six months, while daily active users grew by 78% year-to-date[Hyperliquid (HYPE): A 126x Opportunity as Institutional Adoption …]^[2]. The platform's HLP vault further solidified its appeal, with TVL rising from $150 million in late 2024 to over $400 million by early 2025[Hyperliquid (HYPE): A 126x Opportunity as Institutional Adoption …]^[2]. These metrics underscore Hyperliquid's ability to scale while maintaining institutional-grade infrastructure.

Macro-Driven Momentum: DeFi's Yield Arbitrage Play

The Fed's rate cut created a yield arbitrage opportunity between traditional and DeFi markets. With U.S. Treasury yields near 3.5% and DeFi stablecoin yields at 6–8%, capital flows shifted toward crypto. CoinLive analysts observed that projects like Ondo Finance and Uniswap also benefited, with the latter integrating Bitcoin via a layer-2 solution to attract BTC holders[Federal Reserve Implements 2025 Rate Cut Amid Economic Shifts]^[3].

For Avalanche and Hyperliquid, this environment amplified their strengths. Avalanche's institutional-grade infrastructure and Hyperliquid's high-performance trading model positioned them to capture a disproportionate share of inflows. As noted by Forbes, the Fed's dovish pivot could accelerate DeFi's growth to $150 billion in TVL, mirroring the 2020 bull run[State of Avalanche Q1 2025 | Messari]^[4].

Risks and Outlook

While the post-Fed rally is promising, risks remain. Stagflationary pressures and smart contract vulnerabilities could dampen momentum. Additionally, the market's rapid pricing of rate cuts suggests future moves may depend more on project fundamentals than macro trends[Avalanche and Hyperliquid Lead Crypto Rally Post-Fed …]^[1].

However, if the Fed continues its easing cycle, Avalanche and Hyperliquid are well-positioned to capitalize. Avalanche's treasury expansion and ETF prospects, combined with Hyperliquid's perp dominance and hybrid model, create a compelling narrative for both retail and institutional investors.