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On paper, Hyperliquid's tokenomics appear contradictory at this time. Due to dilution pressure and unlock-related worries, HYPE effectively lost about 25% of its value, but the market still drove the token to new all-time highs above $63. That seems illogical until you consider the actual pricing strategies used by traders.
Hyperliquid's unending revenue stream
Fully diluted valuation is the main problem. The market is aware that millions more tokens are still planned to unlock over time, and HYPE's circulating supply is still far below its maximum supply. Although only a small portion of the supply is actively traded, CoinGecko data indicates that the project's FDV already exceeds $60 billion.
Momentum is usually destroyed by that kind of setup. There are numerous tokens in cryptocurrency history that experienced early rallies, later supply unlocks, and subsequent months of bleeding out. The market anticipated that Hyperliquid would do the same.
Fears of aggressive sell pressure were raised by impending unlocks, including nearly 10 million HYPE linked to contributor distributions. Instead of acting like a speculative altcoin, Hyperliquid began acting like an exchange company with actual cash flow. In comparison to the majority of DeFi protocols, the platform continues to report enormous perpetual futures volume, rising TVL, and exceptionally strong fee generation.
This week's reports showed Hyperliquid generating revenue levels that compelled analysts to value it more like CME or a centralized derivatives venue than as a governance token, despite clearing billions in daily perps volume.
Shorts fuel the rally
Short sellers became severely trapped at the same time. During the recent rally, funding turned negative, bearish positioning became crowded, and HYPE surged through a traditional short squeeze. Open interest increased while shorts were compelled to cover above the $50 region, according to Santiment-linked reporting.
Once the chart broke through the mid-$40 range, HYPE accelerated vertically, reclaimed all of the major moving averages, and broke trend resistance. Because the market now views Hyperliquid as one of the few DeFi projects that is truly printing sustainable revenue, momentum traders poured in despite the RSI overheating.
That does not eliminate the risk. The pressure to unlock is still present. The valuation is stretched. Following a nearly vertical move, a 20–30% correction would not be shocking. However, for the time being, price action indicates that traders are willing to wager on the market's current belief that Hyperliquid can absorb dilution more quickly than supply enters circulation.
Dan Burgin
