Hyperliquid (HYPE): A Convergence of On-Chain Momentum and Institutional Confidence Paves the Way for the Next Bullish Leg

Hyperliquid (HYPE) has emerged as one of the most compelling narratives in decentralized finance (DeFi) in 2025, driven by a unique convergence of on-chain metrics, institutional adoption, and market sentiment. As the platform transitions from a high-performance derivatives exchange to a foundational blockchain infrastructure, its native token is poised to enter a new phase of growth. This article examines the critical triggers—TVL expansion, exchange flows, funding rates, and ecosystem developments—that position HYPE as a prime candidate for a significant price leg higher.

TVL Growth: A Barometer of Adoption and Infrastructure Success

Hyperliquid's HyperEVM layer has seen explosive growth in Total Value Locked (TVL), surging from $1 billion in mid-April 2025 to $2.65 billion by August 2025. This trajectory places HyperEVM among the top 10 blockchains by TVL, surpassing established networks like Avalanche and Sui. The growth is underpinned by the launch of native protocols such as Kinetiq ($1.2 billion TVL) and Hyperlend ($421 million TVL), which leverage Hyperliquid's dual-layer architecture to offer deep liquidity and composability.

The deployment of CoreWriter in July 2025 marked a pivotal step, enabling seamless data integration between HyperEVM and HyperCore. This advancement not only enhances smart contract utility but also positions Hyperliquid as a scalable alternative to Ethereum and Solana for DeFi applications.

Exchange Flows and Funding Rates: A Tale of Resilience

Despite a challenging March 2025 period marked by $590 million in outflows, Hyperliquid's TVL has rebounded with an average weekly inflow of $58 million. The platform's decentralized perpetual exchange (Perps DEX) continues to dominate the market, processing over $357 billion in derivatives trading volume in August 2025 alone. This liquidity depth is reflected in HYPE's Open Interest (OI), which remains above $2 billion, signaling sustained retail and institutional demand.

However, the funding rate for HYPE perpetual futures has declined from a peak of 0.0663% in August to 0.0090%, indicating a moderation in bullish fervor. While this suggests a temporary cooling in leveraged long positions, technical indicators remain bullish: the 50-period EMA at $43.91 acts as a key support level, and the MACD histogram shows positive momentum. The RSI at 56 further suggests that buying pressure is building, hinting at a potential breakout.

Ecosystem Developments: Institutional Backing and Protocol Innovation

Hyperliquid's ecosystem has attracted institutional validation, with Galaxy Digital joining as a validator and BitGo enabling institutional-grade custody for HYPE. These developments signal confidence in the platform's infrastructure and governance model. Additionally, the launch of Unit, Hyperliquid's asset tokenization layer, has unlocked new use cases. Unit allows direct deposits and withdrawals of major assets (BTC, ETH, SOL, etc.) without wrapping or bridging, generating $15 billion in trading volume in H1 2025.

The Assistance Fund, which automates HYPE buybacks using trading fees, has reduced the token's circulating supply by acquiring 29.8 million tokens (valued at $1.5 billion) since January 2025. This deflationary mechanism has created upward pressure, with HYPE surging 430% since its April low and 15x from its November 2024 launch price.

Market Sentiment Triggers: Macro and Institutional Catalysts

Recent macroeconomic developments have further amplified HYPE's momentum. The Federal Reserve's dovish stance at the Jackson Hole symposium in August 2025 reignited risk-on sentiment, with HYPE reaching a new all-time high amid broader altcoin outperformance. Institutional inflows into Ethereum ETFs ($12.4 billion cumulative inflows) have also benefited HYPE, as capital rotates into high-yield DeFi protocols.

On-chain activity reinforces this narrative: daily active addresses on HyperEVM hit 44,000 in June 2025, while validator expansion (from 21 to 24 nodes) has enhanced security and decentralization. Meanwhile, whale activity—such as a $2 billion BTC-to-ETH conversion via Hyperliquid—highlights the platform's role as a liquidity hub.

Risks and the Path Forward

While HYPE's fundamentals are robust, risks include token unlocks scheduled for November 2025, which could introduce selling pressure. However, the ecosystem's strong TVL growth, institutional adoption, and buyback program mitigate these concerns. Upcoming developments—such as PawSwap (a liquidation auction mechanism) and Swype Card (a payment card linked to on-chain positions)—are expected to further diversify revenue streams and attract retail and institutional capital.

Investment Thesis: Why Now Is the Optimal Entry Point

Hyperliquid's confluence of on-chain growth, institutional validation, and technical momentum creates a compelling case for entry. The platform's TVL growth trajectory, combined with a deflationary token model and expanding ecosystem, positions HYPE to capitalize on the next wave of DeFi adoption. With the Fed's dovish pivot and Ethereum's layer-2 innovations fueling broader market optimism, HYPE is uniquely positioned to outperform in a risk-on environment.

For investors, the key is to monitor funding rate normalization and validator activity as leading indicators of the next bullish phase. Given the current valuation (FDV of $50 billion with only 33% of supply in circulation), the upside potential remains substantial—provided the ecosystem continues to execute on its roadmap.

In conclusion, Hyperliquid's strategic positioning as a high-performance blockchain and DeFi hub, coupled with its robust on-chain metrics and institutional traction, makes it a standout opportunity in the current market cycle. For those seeking exposure to the next major price leg, the time to act is now.