Why is HYPE useful when market liquidity is increasing?
Hyperliquid (HYPE) has moved on the broader market since the beginning of the year, aided by several internal and unique drivers. Analysts noted that the liquidation loss helped drive up HYPE's value.
How long can HYPE continue to dominate the market? Multiple data points across chains and markets provide a more nuanced view.
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The Drivers Behind Hyperliquid's Market Outperformance
As capital continues to flow out of the broader crypto market, HyperLiquid (HYPE) has attracted inflows. As of the middle of last month, the total crypto market capitalization has dropped from $3.2 trillion to $2.2 trillion, according to TradingView data. At the same time, HYPE rose by 60%, from $20.6 to $33.6.
This difference shows that the internal stimuli of HYPE outweighed the heavy selling pressure of the market.
Recent reports from BeInCrypto claim that part of this trend is a significant increase in trading volume on HIP-3 futures contracts on Hyperliquid.
A Grayscale study earlier this year on Hyperliquid shows growth in perpetual futures trading for non-crypto assets. The platform recorded a seven-day average trading volume of more than $900 million.
In addition, Ripple Prime has opened institutional access to Hyperliquid's on-chain derivatives tools. This move supports liquidity and wider adoption.
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Another development reinforced the HYPE on February 5, the day with the most fearful market sentiment in a year. Coinbase has officially enabled HYPE trading, which hasn't affected the token's widespread sales.
A listing on a major exchange like Coinbase has boosted liquidity and demand. It has attracted institutional and retail investors. This allowed HYPE to absorb selling pressure and even extend profits when the market was down.
“Coinbase is listing HYPE! There are two variations to this listing:
This may be a prerequisite for HYPE ETFs to start trading since Coinbase is a custodian. US investors still have the problem of HYPE exposure; The Coinbase listing simplifies that.” —Steven.Hall, Yount Capital said.
Some analysts add that the absence of HYPE from Binance could be an advantage. The signal can help avoid widespread sales. Investor MartiParty noted that HYPE is the only Tier-1 asset not listed on Binance. As a result, he avoided being drawn into this “fluid hunt.”
Why do big leaks hype up the HYPE?
Other analysts argue that the price history of HYPE is deeper.
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According to data from Coinglass, HyperLiquid accounted for more than $630 million of the $2.6 billion that flowed in 24 hours. This figure was slightly lower than Bybit but higher than Binance.
Analysts explain that heavy liquidity supports HYPE's value due to its fee-based return mechanism. Higher liquidity means higher trading volume which leads to higher income.
As of Feb. 5, HyperLiquid generated $7.49 million in payouts and $6.84 million in revenue, according to Defilama data. This marked the highest level since the market crash on October 10 last year.
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For most projects, market failures reduce revenue. Hyperliquid, as an exchange, uses liquid movement instead. This variable directly affects the price of HYPE.
Data from Hyper Screener shows that over 160,000 HYPE tokens were bought back on February 5. This is the highest level since the October 10 market dump.
This structure provides a unique mechanism for HYPE to avoid negative market pressure.
“Recently, the commotion here is due to a lot of liquidity, which leads to higher fees and earnings,” said analyst Tor.
However, focusing too much on positive narratives can cause investors to see risks. On February 6th, 9.92 million HYPE tokens are scheduled to launch. Additionally, negative market sentiment may persist and outweigh the positive sentiments of HYPE.
The latest analysis from BeInCrypto highlights the importance of the $30 level. Price action above or below this threshold will be the basis for predicting HYPE's next move this month.
