Hyperliquid’s big test: Can institutional demand absorb $100M in whale selling?

Hyperliquid [HYPE] is reducing its supply through continuous purchases and token burning, which will help sustain the strength of its value capture model for the token.

For example, since the last 24 hours, Hyperliquid has purchased and burned approximately 10.4k HYPE tokens at an approximate cost of $956.8k. The burn of these tokens was tied to fees generated by the protocol.

This process becomes even more important as trading volume grows exponentially and creates compound effects. As such, Hyperliquid has earned $58.27 million in revenue during the last 30 days. In addition, this has created daily buybacks averaging approximately $1.16 million.

This should be able to create continued removals of tokens from the market when there is sufficient trading activity.

Total cumulative burn is at 48.96 million HYPE, or approximately 4.9% of the one billion maximum supply. However, the current burn pace remains modest relative to total supply.

Therefore, the long-term effect of this process will ultimately depend upon whether trading volume and fee generation continue to grow rapidly enough to increase the burn rate of tokens.

HYPE ownership shifts toward whales

The supply reduction is unfolding alongside a clear shift in HYPE ownership toward larger wallets. HYPE’s ownership base is shifting upward as larger wallets expand while smaller holders retreat.

Wallets holding 10,000 or more HYPE have increased by 24.6%, now totaling 2006. These wallets experienced an acceleration beginning in May, which pushed this cohort dramatically upwards throughout June and September.

In contrast, wallets owning 10 or more HYPE have decreased by 6.3% to 49,026.

The contrast in growth rates indicates larger wallets are capturing additional market capitalization. This is as opposed to the capital being distributed throughout all holders.

At the same time, total holders still increased, as evidenced by an addition of 5,600 new holders over the last 30 days for a total of 281,820 holders.

With 48,330 wallets staking HYPE, more supply may remain locked. As long as larger wallets continue to grow and burns occur, it will likely lead to reduced liquidation options.

HYPE faces a demand-supply test

That shift toward larger HYPE holders is now creating a tug-of-war between fresh institutional demand and potential whale selling.

Hyperliquid Strategies acquired 494K HYPE worth approximately $45.8 million. This purchase further solidifies Hyperliquid Strategies’ accumulation trend, with it holding 35 million HYPE.

The increased purchases will remove additional supply from the market. However, if this accumulation continues, then it could support prices. Conversely, five whales have unstaked approximately $90.4 million in HYPE.

Multicoin also transferred $12.15 million from Coinbase Prime to Coinbase Prime, thus providing another avenue for HYPE to enter the market.

Together, these moves place more than $100 million of potential selling against continued treasury demand. HYPE’s next move, therefore, depends on which side absorbs the other.