Hyperliquid News Today: HYPE Token Slides 60% as Unlock Schedules Fuel Selling Pressure

A former employee of Hyperliquid has sold over $3.3 million worth of HYPE tokens in spot trading this month. The activity has resulted in a $1.43 million monthly loss amid the token's continued decline. The address in question, 0x7ae, once held over $5.85 million in HYPE but now holds just $2.48 million, after offloading over 70,000 tokens. The former employee has also opened a small short position on HYPE, with a current unrealized loss of 43.5%.

Hyperliquid has confirmed that the address belongs to a former team member dismissed in early 2024 and stated that the individual's actions do not reflect the company's values. The former employee is no longer associated with Hyperliquid Labs and was terminated for cause. The company emphasized its strict ethical standards, which include prohibitions against derivatives trading involving HYPE tokens.

The HYPE token has been under pressure due to ongoing unlock schedules and market competition. Over 9.9 million HYPE tokens are scheduled to unlock monthly for the next two years, creating sustained selling pressure. While Hyperliquid's buyback program absorbs about $90 million in new supply each month, the platform remains structurally net inflationary. Additionally, the token's market share has been eroded by rivals like Lighter and Aster, which have captured a growing portion of the perpetual DEX volume.

Why the Standoff Happened

The unlock schedule is one of the key factors driving the current price weakness in HYPE. Over 23.8% of the total HYPE supply began unlocking in November, with monthly releases expected to continue until 2027. This has led to significant on-chain selling, with over 600,000 tokens sold through over-the-counter transactions shortly after the initial unlock. Large holders have also taken profits quickly, exacerbating the downward price movement.

Despite these structural issues, Hyperliquid has posted record revenues and fees, generating $874 million in fees this year alone. The platform has also launched a governance initiative to burn 37 million HYPE tokens, which would reduce the circulating supply by roughly 13%. However, analysts argue that such governance actions are largely symbolic and do not address the underlying supply dynamics.

How Markets Reacted

The HYPE token has experienced a sharp decline, trading down nearly 60% from its September peak. Market analysts attribute this disconnect to the ongoing supply-side pressures rather than a deterioration in Hyperliquid's core operations. In the past week alone, the token dropped 20%, coinciding with outflows of over $430 million from the platform. Hyperliquid's total value locked has also declined from $6 billion to $4 billion since mid-September.

The price drop has triggered significant losses for large holders. One whale has faced a $19.6 million unrealized loss on a 5x leveraged position, adding $2 million in USDC collateral to avoid liquidation. The liquidation price for this position has now fallen to $20.65, highlighting the vulnerability of highly leveraged trades in volatile markets.

What Analysts Are Watching

Market observers are closely monitoring Hyperliquid's governance vote on the token burn proposal. The vote, which concludes in late December, could formalize the burning of 37 million HYPE tokens, potentially improving the token's supply-demand balance. Kinetiq, a major staking service, has aligned with the proposal by redirecting staking preferences to validators supporting the burn. If approved, the burn could signal a shift toward deflationary mechanics, potentially boosting long-term holder confidence.

Investment bank Cantor Fitzgerald has issued a bullish outlook for HYPE, projecting the token could surge to $121–$200 in the coming years. The firm's analysis is based on projected 15% annual DEX volume growth and $20 billion in fees over the next decade, most of which would fund token buybacks. However, the report acknowledges short-term challenges from increased competition and regulatory uncertainty.

The future of HYPE will depend on how the market digests these ongoing supply pressures and the success of governance initiatives to improve token economics. While Hyperliquid's platform continues to grow in terms of fees and volume, the token's price remains vulnerable to structural imbalances and broader macroeconomic factors. Investors and analysts will be watching closely for signs of stabilization or further deterioration in the coming weeks.