HYPE Token Faces Turbulence: A Deep Dive Into Recent Market Dynamics
The cryptocurrency market continues to remain volatile, and Hyperliquid’s native token, $HYPE, is no exception. On December 16, 2025, $HYPE witnessed a sharp drop of over 9%, underperforming the broader crypto market, which declined by approximately 4%. This significant dip reflects growing market pressure, a cautious investor sentiment, an increase in token supply, and technical weaknesses.
Why $HYPE Plummeted
At press time, $HYPE stands at $26.72, reflecting a 9.09% drop in the last 24 hours, according to CoinMarketCap. The market chaos resulted in over $584 million of risky trades being liquidated in a single day, and Hyperliquid wasn’t spared. Approximately $115 million in long positions were wiped out as traders anticipated the token price to climb, only to see their bets ruined as the market took a downturn.
Breaking below the critical $28–$30 range triggered automatic sell orders, causing a chain reaction that exacerbated the crash. Hyperliquid, which relies heavily on leveraged trading activity, is particularly susceptible to rapid price movements, turning minor declines into sharper falls.
ETF News and Its Mixed Impact
There was some hope on the horizon with Bitwise’s ETF initiative. On December 15, 2025, the company updated its documentation for their Hyperliquid ETF, $BHYP, featuring a low fee of 0.67% and staking rewards. Industry analysts, including Eric Balchunas from Bloomberg, hinted at an imminent launch by late December or early January.
While this news initially seemed favorable, it failed to prevent the token’s price decline. Profit-taking by traders, coupled with regulatory concerns regarding staking returns, led to a “sell the news” phenomenon. This pushed the token below critical support levels, damaging market confidence further.
Increased Token Supply Driving Sell-Offs
An additional factor contributing to the downtrend is the release of 1.75 million new $HYPE tokens on November 29. This release increased the circulating supply, pushing early holders to offload tokens for profits. The timing of the supply increase coincided with ongoing liquidations, compounding the downward momentum.
Although most $HYPE tokens remain locked or staked, limiting the long-term impact of such releases, traders are now monitoring whether long-term holders will absorb the additional tokens to stabilize the market. Failing this, selling pressure may persist.
Market Outlook: Are Lower Levels Ahead?
Technical analysis suggests significant short-term challenges for $HYPE. The token failed to maintain support levels around $28.1 and $30, entering a zone dominated by selling pressure. Analysts predict the price may drop to $25 or even lower, potentially triggering interest from buyers as the market nears oversold conditions.
Prominent market commentator Altcoin Sherpa shared a similar sentiment, stating, “Unlocks are unlocks, and the market environment has been quite bad for altcoins, even those as strong as Hyperliquid.” Short-term pain, however, doesn’t diminish the long-term potential of the Hyperliquid project, which remains highly regarded in the crypto space.
Discover Staking Opportunities With $HYPE
If you’re a long-term investor looking to capitalize on staking rewards, the ETF launch by Bitwise might be the perfect opportunity. Once live, the Bitwise Hyperliquid ETF ($BHYP) will offer a low fee structure and staking benefits for investors willing to hold $HYPE through turbulent times.
The Bottom Line
Hyperliquid’s $HYPE token faces immediate challenges due to increased supply, leveraged trading pressure, and regulatory uncertainty. However, favorable developments like the Bitwise ETF and strong community support could provide a springboard for recovery in the long run. For now, cautious investors are advised to watch market signals closely while considering opportunities to buy the dip for potential future upside.
