Hyper Liquid (HYPE) has been moving against the broader market since the beginning of the year, backed by some distinctive internal drivers. Analysts observe that liquidation losses are actually helping to push up the price of HYPE.
How long can HYPE continue to outperform the market? Several on-chain and market data points provide a more nuanced perspective.
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The driving force behind Hyperliquid’s superior performance in the market
While money continues to flow out of the broader crypto market, Hyper Liquid (HYPE) has been attracting inflows. Since mid-last month, the market capitalization of cryptocurrencies has fallen from $3.2 trillion to $2.2 trillion, according to TradingView data. During the same period, HYPE rose 60% from $20.6 to $33.6.
This divergence suggests that HYPE’s internal catalysts outweighed the market’s intense selling pressure.
A recent report from BeInCrypto attributes some of this momentum to a surge in trading volume for HIP-3 futures contracts on Hyperliquid.
Grayscale Research highlights the boom in perpetual futures trading of non-crypto assets on Hyperliquid earlier this year. The platform recorded an average seven-day trading volume of over $900 million.
Additionally, Ripple Prime has opened up institutional access to Hyperliquid’s on-chain derivatives tools. This move supports liquidity and wide adoption.
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On February 5th, a day marked by the scariest market sentiment in a year, another development reinforced HYPE. Coinbase officially enabled HYPE trading and the token was largely unaffected by the widespread decline.
Listing on major exchanges like Coinbase has increased liquidity and demand. It attracted both institutional and individual investors. This allowed HYPE to absorb selling pressure and grow profits even in a declining market.
“Coinbase is listing HYPE! There are two nuances to this listing:
Since Coinbase is the custodian, this could be a precursor to the start of trading for the Spot HYPE ETF. US investors still struggle with exposure to HYPE. Coinbase listing alleviates that. ”
— Steven.hl of Yunt Capital said.
Some analysts add that HYPE’s lack of participation on Binance could be an advantage. This could help avoid a widespread collapse of the token. Investor MartyParty points out that HYPE is the only Layer 1 asset not listed on Binance. As a result, we were able to avoid getting caught up in this “liquidity hunt.”
Why does HYPE rise when liquidations become large?
Other analysts argue that HYPE’s price story has deeper roots.
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Hyperliquid accounted for more than $630 million of the more than $2.6 billion liquidated in 24 hours, according to Coinglass data. This number was slightly lower than Bybit, but higher than Binance.
Analysts explain that large liquidations tend to support HYPE’s price due to the buyback mechanism based on fee income. Higher liquidation volume means more trading volume, which also increases fee income.
As of February 5, Hyperliquid generated $7.49 million in fees and $6.84 million in revenue, according to data from DefiLlama. This is the highest level since the market crash on October 10 last year.
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For most projects, market crashes result in reduced returns. As an exchange, HyperLiquid will benefit from clearing activity in return. This dynamic directly impacts the price of HYPE.
According to Hyperscreener data, over 160,000 HYPE tokens were bought back on February 5th. This was the highest level since the market selloff on October 10th.
This structure gives HYPE a unique mechanism to counter negative market pressures.
“The recent rise is most likely due to a number of liquidations, which tend to result in large fees and profits.”
— Analyst So said:
However, focusing too much on the positive story can cause investors to overlook the risks. On February 6th, 9.92 million HYPE tokens are expected to be unlocked. Additionally, negative market sentiment could persist and outweigh the positive catalysts in HYPE.
BeInCrypto’s latest analysis highlights the importance of the $30 level. Price movements above or below this threshold are the basis for predicting HYPE’s next move this month.
