Why is HYPE token pumping and showing strength even in the unfavorable market condition?
TL;DR: HYPE is decoupling from the broader crypto market crash because of a direct link between trading volume and token price. The Hyperliquid exchange is seeing massive activity in new silver and gold markets, which generates fees. The protocol uses about 97% of these fees to buy back and burn HYPE, creating constant buying pressure regardless of what Bitcoin does.
The Buyback Engine
The primary reason for HYPE's strength is its tokenomics model. Unlike many tokens that just sit there, HYPE is actively bought by the protocol itself. Hyperliquid directs approximately 97% of its trading fee revenue into an "Assistance Fund" to buy HYPE off the open market and burn it.
This means when people trade heavily on Hyperliquid, the protocol becomes a massive buyer of its own token. This mechanical buying pressure supports the price even when the rest of the market is panic selling.
The Silver Trade Explosion
The trigger for the recent surge in fees—and therefore buybacks—is the launch of commodities trading. The platform recently enabled trading for assets like silver and gold through its HIP-3 upgrade.
Traders rushed to trade silver on-chain, with the Silver-USDC market alone recording over $1 billion in volume in a single 24-hour period. This activity generated millions in fees, which were immediately funneled back into buying HYPE. While crypto prices crashed, commodities volatility drove volume to Hyperliquid, inadvertently pumping the HYPE token.
Institutional Holding and Staking
Supply pressure has been lower than expected. Large holders who recently had their tokens unlocked did not sell.
- Continue Capital: Unlocked 1.47 million HYPE and staked it instead of selling.
- Hyperion DeFi: A treasury firm accumulating HYPE reported holding over 1.4 million tokens and staking them.
- Tornado Cash Cluster: A wallet cluster linked to privacy mixers also staked a significant unlock rather than dumping it.
When big holders stake instead of sell, it restricts the supply available on the market, making the buybacks from fee revenue even more effective at pushing the price up.
Current Market Data
While Bitcoin struggles below $58k, HYPE is trading independently.
- Price: ~$37.19
- 24h Change: +19.1%
- Market Cap: $8.86 Billion
- 24h Volume: $988 Million
- Open Interest: Up ~50% in the last 24 hours to $275M, indicating traders are aggressively opening new positions.
