Hyperliquid (HYPE) and the Paradox of Whale-Driven Momentum: Why Large Capital Inflows Fail to Sustain Price Gains in Volatile Crypto Markets

The Hyperliquid (HYPE) token has become a focal point for analyzing the interplay between whale activity and price volatility in crypto markets. Despite significant capital inflows from large holders-such as a $12.1 million accumulation of 490,000 HYPE tokens in just 14 days-the token has struggled to maintain sustained upward momentum. This article dissects the mechanics of whale-driven movements, structural market weaknesses, and investor psychology to explain why large capital inflows often fail to translate into durable price gains for HYPE and similar assets.

Whale Accumulation and Short-Term Stabilization

Whale activity has undeniably influenced HYPE's price trajectory in late 2025. A major whale deposited 12.06 million USDC into Hyperliquid between December 17, 2025, and January 10, 2026, acquiring 480,997 HYPE tokens at an average price of $25.07. This accumulation, coupled with prior purchases totaling $14.4 million in July–October 2025, signaled strong institutional confidence. Technical analysts noted that such activity coincided with HYPE's attempt to break above the 50-day EMA at $29.29, with bullish projections toward $40.

However, these inflows did not immediately reverse the token's bearish structure. A critical factor was the November 2025 supply shock, where 9.92 million HYPE tokens (~$351.5 million) were unlocked for early insiders. This one-time event overwhelmed daily buybacks and created a descending channel for HYPE, with mid-channel support testing at $33–$35. The resulting bearish pressure overshadowed whale-driven optimism, illustrating how structural supply dynamics can counteract even large capital inflows.

Structural Weaknesses and Supply Shocks

The November 2025 unlock exemplifies a recurring challenge in crypto markets: sudden liquidity events that dwarf the impact of whale accumulation. While whales can absorb short-term downside risk- such as the $21.5 million in HYPE tokens acquired near $22.26 support- they cannot fully offset the dilutive effects of large-scale unlocks. For instance, the 9.92 million HYPE token release depressed the price to $35, with technical models predicting a 15% pullback to $28–$30.

Moreover, whale activity itself introduces fragility. A major whale sold $8.2 million in HYPE tokens in late 2025, raising concerns about liquidity absorption. Such actions, combined with declining spot and futures volumes, highlighted the precarious balance between accumulation and distribution. Even as whales signaled long-term conviction, the market remained vulnerable to large-scale sell-offs, particularly from entities like Fasanara Capital, which transferred 25,000 HYPE tokens to Bybit.

Investor Psychology and Market Sentiment

Investor sentiment around HYPE in 2025 was polarized. On-chain data revealed whale buying clustered around $20–$26, aligning with technical support zones. This activity contrasted with retail caution, as the Hyperliquid Fear and Greed Index registered a neutral 48, and bearish indicators like the MACD and RSI reinforced the downtrend according to technical analysis. The long/short ratio favored shorts at 52.24%, while open interest dropped 4.44% to $1.47 billion, underscoring waning speculative interest.

Whale accumulation, while stabilizing, did not fully restore confidence. For example, James Wynn's $4.12 million sell-off in June 2025 demonstrated the volatility inherent in high-leverage trading. Meanwhile, strategic limit buy orders placed at $15 and $25.60 by whales suggested expectations for deeper corrections, further complicating market psychology. This duality-institutional optimism versus retail caution-created a fragmented narrative, where whale-driven inflows failed to unify market sentiment.

Strategic Implications for Investors

For investors, the HYPE case underscores the importance of balancing optimism with caution. Whale accumulation near key support levels- such as the $20–$26 range-presents strategic entry opportunities, particularly if prices test these zones. However, the risk of large-scale sell-offs and structural weaknesses in daily charts necessitates a measured approach.

Technical analysis suggests that HYPE could rebound toward $40 if it breaks above the 50-day EMA, but this scenario hinges on sustained whale participation and reduced selling pressure. Investors should also monitor derivatives positioning and funding rates, which indicated growing bearish expectations in late 2025.

Conclusion

Hyperliquid's HYPE token exemplifies the paradox of whale-driven momentum in volatile crypto markets. While large capital inflows can stabilize prices and signal long-term conviction, they often fail to overcome structural supply shocks and fragmented investor psychology. For HYPE, the path forward depends on whether whales can absorb downside risk without triggering further sell-side risks-a delicate balance that remains uncertain. Investors must weigh the potential for stabilization against the fragility of whale-driven narratives, adopting strategies that align with both technical and behavioral market dynamics.