HYPE price drops by 10%, but this is why Hyperliquid remains one of the strongest cryptocurrencies

Excess liquid price (HYPE). The stock has been under short-term selling pressure, down about 10% from recent highs as traders take profits amid broader market weakness. However, while the price action looks bearish in the near term, the underlying fundamentals of the protocol continue to strengthen through record revenue generation, strong buybacks and burns, and growing adoption.

This raises an important question for investors: Is the current decline just a healthy correction within a larger uptrend, or does it signal the beginning of a deeper reversal?

HYPE Price Analysis: Healthy decline or trend reversal?

HYPE price appears to be going through a correction phase after a strong multi-month rally rather than a confirmed trend reversal. The token has pulled back towards the $54-$55 support zone, an area that previously acted as resistance before the recent breakout and is now being tested as potential support.

The broader price structure remains constructive. As long as the lower border of this channel holds, the current decline can be viewed as a natural correction within a larger bullish structure.

The Relative Strength Index has fallen, indicating that the upward momentum has weakened significantly after previously entering overbought territory. At the same time, the Directional Movement Index (DMI) shows buying strength fading while sellers are starting to gain strength, with levels heading towards a bearish crossover.

For now, the $54-55 area remains the key level to watch. Successful defense of this support could encourage buyers to target a recovery towards the recent highs. Conversely, a decisive breakout below this zone could expose HYPE to a deeper correction towards the lower boundary of the ascending channel near the $40 lows. Although the technicals are still weak, the fundamentals are getting stronger, which could influence the price in the long term.

Why Hyperliquid remains one of the strongest fundamental plays in the cryptocurrency space

Despite the recent correction in HYPE price, Hyperliquid continues to strengthen its long-term investment case through a combination of revenue generation, deflationary token economies, and ecosystem growth.

• Revenue-based token model: Hyperliquid has generated over $1.15 billion in protocol revenue since launch, proving that its business model is backed by real user activity rather than speculation.

• Industry-leading buyback mechanism: Approximately 97-98% of the protocol’s revenue is used to buy back and burn HYPE, creating constant buying pressure as trading activity increases.

• Contractionary supply economics: HYPE currently has annual supply growth of around -3.02%, making it one of the few major crypto assets with strong deflationary token economics.

• Millions of tokens have already been removed: More than 46 million HYPE tokens worth approximately $2.8 billion have already been bought back and burned, permanently reducing the available supply.

• Potential future supply shock: If the protocol maintains its current revenue pace, projections indicate that another 8 million HYPE could be burned by the end of the year, bringing total burns to approximately 54 million tokens, or about 18% of the circulating supply.

• Huge business activity supports the model: Hyperliquid processed approximately $2.9 trillion in perpetual futures volume in 2025 while maintaining approximately $7 billion in open interest, demonstrating that its buyback mechanism is supported by significant platform usage.

• Long-term ecosystem incentives remain significant: The protocol has allocated 388.88 million HYPE tokens (38.888% of total supply) for future community rewards and ecosystem growth, providing a wealth of incentives for long-term expansion.

• Institutional adoption continues to grow: New products like Grayscale’s HYPG and additional USDC yield opportunities indicate that Hyperliquid is expanding beyond its native crypto user base.

Wrapping Up: What Should Traders Watch Next?

Short-term price corrections are a normal part of every strong uptrend, and HYPE’s technical indicators suggest that volatility may continue until key support levels are confirmed. However, unlike many crypto assets that rely primarily on market sentiment, Hyperliquid’s investment thesis is increasingly supported by real protocol revenues, a deflationary token economy, and expanding ecosystem adoption.

As a result, the near-term outlook depends on Hyperliquid’s technical price action, as the project’s long-term fundamentals continue to make a compelling case for sustainable growth.

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