HYPE rises 5.31% behind the scenes: market rebound masks fundamental difficulties

HYPE rebounds on January 5th, rising 5.31% over 24 hours, currently trading at $26.42, with a market cap increase of $452 million to $8.965 billion. This surge appears optimistic, but data reveals that the rebound is largely driven by overall market sentiment improvement, while HYPE’s fundamental challenges have not been truly addressed.

Market Sentiment Improvement Drives the Rally

The overall crypto market is currently bullish, with BTC breaking above $93,000, the AI sector up 6.44% in 24 hours, and the Meme sector up 6.23%. In this market context, HYPE’s rebound seems natural. Price-wise, HYPE reached a high of $27.28 and dipped to $23.91 within 24 hours, with a trading volume of $238 million, indicating relatively active market participation.

Large investors’ attitudes reveal market signals

However, on-chain whale behavior shows mixed opinions on HYPE. On one hand, a whale bought 108,000 HYPE at $25.63 and staked part of the position, opening a new long position worth $32.62 million, with HYPE as a key allocation; simultaneously, Huang Licheng has shifted funds to increase HYPE longs, now holding a position worth $5.38 million at an average price of $25.8. These incremental bullish signals suggest some institutions remain optimistic about HYPE’s future performance.

On the other hand, a major trader reduced their HYPE long position by tenfold to 98,000 tokens and increased ETH holdings; a previously dormant entity has recently unstaked 630,000 HYPE (worth $20.3 million), indicating early holders are cashing out. This interplay of accumulation and distribution reflects diverse market expectations for HYPE’s prospects.

Fundamental Concerns Cannot Be Ignored

More concerning are the underlying fundamental issues. According to latest data, Hyperliquid’s December revenue reached $61.24 million, down 32.4% month-over-month, a significant decline from $90.6 million in November. This revenue drop is closely related to intensified industry competition, with market analysts noting that maintaining current dominance is insufficient for sustained leadership.

Market Share Being Eroded by New Entrants

Even more severe, the perpetual contract DEX market saw significant changes in Q4. Lighter and Aster’s 30-day trading volumes have surpassed Hyperliquid. Lighter’s 30-day volume approaches $198 billion, while Hyperliquid’s is around $166 billion in the same period. Lighter has rapidly expanded through mechanisms like a 25% community airdrop of LIT tokens and removing some taker fees, with TVL growing from under $200 million in August to $1.43 billion.

Although Hyperliquid still leads in open interest ($7.3 billion) and annualized fees ($820 million), the short-term trading volume being overtaken indicates increased market competition, which could pressure HYPE’s long-term valuation.

Founder’s Commitment to “Trustworthy Neutrality” Comes at a Cost

Notably, Hyperliquid founder Jeff Yan defends its stance of “trustworthy neutrality,” emphasizing that it does not involve private investors, market makers, or protocol fees. While this principled stance maintains protocol neutrality, in an era where competitors actively offer incentives, it may limit growth speed.

Will the Rebound Continue?

Currently, HYPE’s 5.31% rebound directly reflects improved market sentiment, but whether it can sustain depends on several factors. First, whether fundamentals can turn around, especially if revenue can rebound; second, whether competitive pressures can ease, particularly if market share and trading volume can be regained; third, whether continued institutional optimism can translate into real market support.

Based on available information, these questions remain unclear. While HYPE has short-term opportunities for a market rebound, long-term challenges include a more intense and fragmented competitive landscape.

Summary

HYPE’s 5.31% increase reflects overall market sentiment improvement rather than a fundamental turnaround for HYPE itself. Revenue down 32.4%, market share erosion, and accelerated expansion by competitors are real difficulties HYPE faces. Diverging institutional attitudes also indicate market uncertainty about HYPE’s future. Short-term rebounds do not solve long-term issues; investors should watch whether Hyperliquid can re-establish its competitive advantage, which will be key to HYPE’s subsequent trajectory.