Hyperliquid News Today: HYPE Dips to $22.4 on Unlock-Driven Sell-Off, Testing Key Support Levels

Hyperliquid's native token, HYPE, has plummeted to $22.4, marking its lowest price since May 8, 2025. The decline follows a large-scale token unlock that released 9.92 million HYPE tokens, valued at about $312 million, into the market. This unlock triggered immediate selling pressure and eroded investor confidence amid broader market volatility.

The price drop reflects growing concerns about supply-side dynamics in the HYPE token economy. Over the past two years, recurring unlocks have introduced significant liquidity risks, and the latest event has exacerbated those fears. Market observers are closely watching how the token's deflationary mechanisms will counterbalance ongoing inflationary pressures.

Recent volatility has been amplified by broader crypto market conditions. Heavy liquidations, including a $11 million HYPE position on Hyperliquid, signal heightened sensitivity to price swings. Meanwhile, investor sentiment remains cautious as the token's price continues to trade far below its all-time high of $59.4.

Market Reaction to Unlock and Burn Proposals

The market response has been mixed, with some positive developments emerging alongside the bearish trend. On December 17, the Hyper Foundation announced a validator vote to treat 37 million HYPE tokens in the Assistance Fund as permanently burned. This action aims to remove 3.71% of the total supply from circulation, reinforcing the token's deflationary properties.

Validator participation will determine the proposal's success. The process involves three key stages: forum signaling, staking alignment, and a final decision based on staked tokens. Validators must align with community sentiment to avoid losing staked support. This governance model emphasizes decentralization while ensuring long-term scarcity.

The burn is already considered effective from a technical standpoint, as the tokens are mathematically unreachable without a hard fork. The announcement initially spurred a 3.64% price increase, though gains have since faded amid ongoing market uncertainty. Analysts remain divided on how effectively the burn will offset recent unlock pressures.

Analysts' Views and Future Outlook

Investment bank Cantor Fitzgerald has taken a bullish stance on HYPE, projecting a potential rise to over $200 in the coming years. The firm estimates that Hyperliquid's decentralized exchange (DEX) could generate $20 billion in fees over the next decade, with much of the revenue allocated to token buybacks. A multiple of 22.9x–50x on annualized fees supports the high-end price targets.

However, analysts caution that competition and regulatory uncertainty could temper growth. New entrants like Lighter and Aster have reduced Hyperliquid's market share to 17%, down from 60% in May. Institutional adoption and product innovation remain key drivers, but volatility and token unlock risks persist.

Market observers are also tracking the impact of regulatory clarity. Compliance with the U.S. GENIUS Act and the EU's MiCA framework has bolstered Hyperliquid's reputation as a trustworthy alternative to centralized exchanges. Yet, macroeconomic factors and ETF outflows continue to influence short-term price action.

Risks and Uncertainties

The ongoing token unlock schedule poses a significant risk to the token's valuation. A large team vesting event in late 2024 has already caused price dips, and future unlocks could further pressure supply-demand dynamics. Additionally, heavy liquidation events, such as the $33 million HYPE liquidation in December, highlight vulnerabilities in the market structure.

Investor confidence also hinges on governance outcomes. If the burn proposal fails, it could undermine market sentiment and delay the token's path to recovery. Conversely, a successful vote would strengthen the narrative around long-term scarcity and align with broader deflationary trends seen in other crypto assets.

For now, HYPE remains in a critical phase. Market watchers are keenly aware that the token's ability to manage liquidity risks and maintain institutional interest will determine its future trajectory. In the short term, key price levels like $25 and $30 will be closely monitored as potential turning points.