Here’s Why HYPE Dropped 20% in the Last 24 Hours

Hyperliquid’s native token, HYPE, saw a significant 20% price drop today, falling to $26.54, with its market cap dropping below $9 billion. This comes after a period of impressive growth, with HYPE reaching an all-time high of $34.96 on December 22, marking a nearly 200% increase from its airdrop listing price of $11. The surge in HYPE’s value had boosted its market cap to over $11.5 billion, briefly positioning it among the top 20 cryptocurrencies by market cap.

Launched in June 2023, Hyperliquid DEX (decentralized exchange) has drawn attention for its innovative model that eliminates gas fees for transactions, offering low fees on perpetual contracts and trade openings. The platform reinvests its revenue into the ecosystem through token buybacks or by supporting vaults. A key driver behind HYPE’s recent rally was one of the most anticipated token airdrops of the year, where Hyperliquid distributed 310 million tokens, the largest airdrop in crypto history.

However, the price of HYPE has recently fallen by 26% from its record high, hitting an intraday low of $25.77 on December 23, as concerns grew within the community. The price slump, which brought its market cap down to $8.87 billion, has been attributed to several factors.

One of the primary reasons for the drop was the sell-off by a major whale, known as “laurentzeimes” on X, who began offloading over 1 million HYPE tokens. These sales were executed through Hyperliquid’s TWAP (Time-Weighted Average Price) mechanism, designed to minimize slippage by breaking large orders into smaller ones over a set period. As of the latest data, the whale has sold around 175,000 tokens. Such a large sell-off from a single entity typically triggers concern and leads to a price drop.

Additionally, there have been concerns over potential security vulnerabilities on the Hyperliquid platform. A cybersecurity expert, Tayvano, raised alarms on X about North Korean hackers possibly using the platform to test for weaknesses. Hyperliquid’s reliance on just four validators has compounded these worries, leading to increased caution in the market. Following these concerns, Hyperliquid saw over $42 million in USDC outflows—the largest amount since its launch—which likely contributed to HYPE’s price decline.

Despite these setbacks, some analysts remain optimistic about HYPE’s future. Analyst CJ, with a large following on X, maintains a bullish outlook, suggesting that HYPE could surge to $40 if it breaks through the resistance levels at $30–$32. He also speculated that a price dip to $18–$22 might present a good buying opportunity for traders. If the price rebounds to around $32.3, it would invalidate his bearish prediction.

The broader outlook for HYPE remains positive, supported by Hyperliquid’s strong position in the decentralized finance (DeFi) sector. The platform has experienced substantial growth, with its weekly trading volume peaking at $98.6 billion and its total value locked (TVL) surpassing $3.4 billion for the first time this month, up from $188 million in October. These figures suggest that, despite recent turbulence, Hyperliquid’s future remains promising, and HYPE may resume its climb if the market stabilizes.