Hyperliquid's Buybacks Fuel HYPE's Record Surge—But Will Upcoming Unlocks Derail Momentum?

Hyperliquid’s native token, HYPE, reached an all-time high above $50 on August 27, surging approximately 8% in the past 24 hours. The token’s rally was driven by record-breaking trading activity on the decentralized exchange, which processed over $357 billion in derivatives volume in August alone. This marked a significant increase from $319 billion in July and nearly ten times the volume recorded in August 2024. Spot trading volumes also hit a new high, exceeding $3 billion for the week ending August 24. The elevated activity generated $105 million in trading fees for Hyperliquid in August, the highest of the year, per DefiLlama data. A substantial portion of these earnings is funneled into the protocol’s Assistance Fund, which executes automated buybacks of HYPE tokens on the open market, reducing circulating supply and fueling demand. The fund’s holdings have grown from 3 million tokens to 29.8 million since its launch in January, valued at over $1.5 billion. Analysts at ByteTree highlighted Hyperliquid as one of the “most compelling protocols in DeFi,” noting its strong fundamentals, record-breaking fee generation, and dominant market share. Despite these positive indicators, the report also flagged concerns around valuation. HYPE trades at a fully diluted valuation (FDV) of over $50 billion, with a current market capitalization of approximately $16.8 billion. With only a third of its total supply in circulation, the token could face downward pressure from scheduled unlocks starting in November. Meanwhile, the broader crypto market saw Dogecoin (DOGE) and Cardano (ADA) remain in the spotlight. DOGE’s whale activity and renewed interest pushed it up 15% this week, with on-chain data showing over 40,000 daily active transactions. The token’s market capitalization now exceeds $20 billion, reaffirming its position as one of the most prominent meme coins. Cardano, on the other hand, maintained its value above $0.50, bolstered by its expanding DeFi ecosystem and ongoing smart contract upgrades. With over 1,300 decentralized applications in development, ADA has become a favored long-term investment among developers and investors. Despite their gains, DOGE and ADA were overshadowed by emerging projects. Hyperliquid’s impressive performance in August highlights the growing influence of DeFi protocols in the crypto space. The protocol’s proprietary HyperBFT consensus algorithm and high throughput—supporting up to 100,000 orders per second—have made it a leader in on-chain perpetual trading. The token’s rally was further supported by institutional interest, as digital asset custodian BitGo recently added support for the HyperEVM network, facilitating institutional access to HYPE and related applications. Analysts caution that while Hyperliquid’s fundamentals remain strong, the broader market remains volatile, and valuation concerns persist. The upcoming token unlocks could introduce selling pressure, testing the resilience of current demand. Investors are advised to closely monitor on-chain activity and market sentiment in the coming months. Source: