Hyperliquid's Sudden Surge: What Drives Retail FOMO in DeFi?

The cryptocurrency market's volatility has long been a double-edged sword for investors, but in November 2025, Hyperliquid (HYPE) emerged as a case study in how speculative fervor and structural shifts in DeFi can collide. The protocol's sudden surge-spurred by a delayed shareholder vote for its $888 million digital asset treasury (DAT) merger-has reignited debates about retail investor behavior, liquidity dynamics, and the risks of FOMO-driven markets.

The Catalyst: A Merger in Limbo

Hyperliquid's surge is directly tied to the proposed merger between Rorschach I LLC (affiliated with Paradigm Operations) and Nasdaq-listed Sonnet BioTherapeutics, Inc. This deal, announced in July 2024, aims to create Hyperliquid Strategies, a DAT focused on accumulating HYPE tokens. As of November 2025, the shareholder vote to finalize the merger has been postponed by two weeks, pending sufficient participation according to reports. David Schamis, a representative of Hyperliquid Strategies, has expressed confidence that the required majority vote will be secured by December 2, 2025, citing that over 95% of received votes already support the deal.

The delay has created a unique feedback loop: uncertainty around the merger's approval has intensified retail interest in HYPE, while the token's price action-driven by speculative bets-has, in turn, amplified pressure on the deal's outcome. This interplay between corporate governance and market sentiment is emblematic of DeFi's evolving maturity, where token holders increasingly wield influence over protocol-level decisions.

Retail FOMO and the TNSR Parallel

While direct data on Hyperliquid's retail-driven surge remains sparse, broader trends in DeFi offer instructive parallels. In November 2025, Coinbase's acquisition of Vector.fun-a Solana-based DEX aggregator-sparked a 11-fold surge in TNSR's price within 48 hours, only for the token to drop 37.3% in the following 24 hours according to analysis. This episode highlights the perils of FOMO-driven retail participation, where latecomers often absorb selling pressure from early buyers. On-chain liquidity data revealed sharp divergences in trading patterns, suggesting information leakage and strategic pre-announcement buying.

Though Hyperliquid's surge lacks similar on-chain granularity, the broader market context implies that retail investors are once again prioritizing speculative opportunities over fundamentals. Platforms like CoinCodex have seen spikes in "how to buy Hyperliquid" queries, with exchanges such as KuCoin and Bybit reporting increased trading volumes. This behavior mirrors the TNSR case, where retail investors, driven by social media hype, rushed to capitalize on perceived arbitrage opportunities, often without fully understanding the underlying risks.

Liquidity Dynamics and the Role of AI

The surge in Hyperliquid also underscores shifting liquidity dynamics in DeFi. As trading volumes spike, protocols and third-party tools are adapting to manage volatility. For instance, GeekStake has introduced AI-driven staking adjustments to stabilize returns during sharp BTC/ETH price swings. Such innovations reflect a growing recognition that liquidity providers and retail investors alike need tools to navigate unpredictable markets.

However, these solutions are not foolproof. The TNSR episode demonstrated how liquidity can evaporate rapidly when speculative fervor wanes, leaving retail investors exposed to front-running and wash trading. Hyperliquid's situation, while distinct, raises similar concerns: if the merger is finalized, will liquidity providers lock in gains ahead of the vote? Or will the token's price stabilize as institutional participation increases?

Risks and Opportunities for Investors

For investors considering Hyperliquid, the key risks lie in its high volatility and the uncertainty surrounding the merger. The delayed shareholder vote creates a binary event risk: a successful vote could catalyze further price appreciation, while a failure could trigger a sharp correction. Additionally, the broader DAT sector-once a darling of 2024-has seen a slowdown in 2025, according to reports, with investors growing wary of overhyped projects.

Opportunities, however, exist for those who can navigate the noise. Hyperliquid's focus on institutional-grade liquidity and its alignment with Paradigm-a major crypto backer-suggest long-term potential. Yet, as the TNSR case illustrates, timing and execution are critical. Retail investors must balance FOMO with due diligence, scrutinizing not just the token's fundamentals but also the structural incentives of its ecosystem.

Conclusion

Hyperliquid's surge in November 2025 is a microcosm of DeFi's current state: a blend of institutional ambition, retail speculation, and liquidity-driven volatility. While the DAT merger represents a significant milestone, the broader lesson lies in understanding the interplay between governance events and market psychology. For investors, the challenge will be to distinguish between genuine innovation and fleeting hype-a task that demands both technical analysis and a healthy skepticism of FOMO.