Hyperliquid's HYPE Token Surges Amidst Crypto Downturn, Reaching $3B Open Interest

Key takeaways:

Hyperliquid defies the crypto bear market with $3 billion HYPE open interest, a 32% growth in a week.

Hyperliquid’s TradFi innovation, like SpaceX pre-IPO trading, signals that the path to $80 HYPE price looks well-supported.

Hyperliquid’s native token HYPE rallied 44% over five days, hitting a $76.90 all-time high on Tuesday. Despite the pullback to $73, open interest on HYPE futures reached the $3 billion mark, signaling growing institutional demand.

With Hyperliquid decentralized exchange (DEX) volumes showing no signs of weakness amid the cryptocurrency bear market, traders question the odds of further HYPE gains above $80.

HYPE futures aggregate open interest, USD. Source: CoinGlass

The aggregate open interest on HYPE futures rose 32% from one week earlier. Hyperliquid DEX held a 53% market share in perpetual trading volumes, followed by Binance at 14%, Bybit at 9% and Bitget at 8% according to DefiLlama data. While demand for HYPE futures has undoubtedly picked up, it's worth exploring whether the recent price rally was fueled by excess leverage.

HYPE perpetual futures annualized funding rate. Source: Laevitas

The funding rate on HYPE perpetual futures has remained below the neutral 6% threshold for the past week, signaling weak demand for bullish leverage. Given that HYPE futures open interest increased during the period, short sellers appear to be doubling down despite the losses. It is possible that core contributors with tokens currently locked have partially hedged their positions.

HYPE excitement faces valuation concerns and dilution risk

HYPE circulating supply stood at 253.41 million on Tuesday, while the maximum supply reached 953.92 million according to CoinMarketCap data. Thus, regardless of how quickly current holders face dilution, the project’s fully diluted value (FDV) stands at $71.3 billion. For comparison, the market capitalization of the highly profitable financial company Aon Plc (AON US) stood at $70 billion.

Hyperliquid perpetuals ranking by open interest, USD. Source: Hyperliquid

Hyperliquid has successfully dodged the cryptocurrency bear market thanks to the launch of traditional finance (TradFi) perpetuals, including those on S&P 500 (S&P500), Nasdaq 100 (XYZ100), crude oil (WTIOIL), SpaceX (SPCX), Micron (MU), gold (GOLD), silver (SILVER) and Google (GOOGL). Open interest in TradFi contracts has exceeded $2.9 billion, vastly surpassing Bitcoin’s $2 billion.

Hyperliquid weekly DEX and perpetual volumes, USD. Source: DefiLlama

Considering that aggregate decentralized exchange (DEX) volumes have fallen 57% over the past six months, Hyperliquid stands out as a positive outlier with $9.6 billion in activity. In perpetual contracts trading, no other protocol comes close to Hyperliquid’s 38% market share. Pre-IPO trading of SpaceX shares further highlights the exchange’s constant innovation and broader appeal.

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Source: X/EricSRosengren

Hyperliquid's successful run was highlighted by former Boston Federal Reserve Chair Eric Rosengren, along with an extremely bullish report from Citrini Research, a financial analysis firm. Moreover, HYPE exchange-traded funds (ETFs) have gathered $208 million since launch, signaling strong institutional interest.

Overall, a surge to $80 for HYPE doesn’t seem out of reach considering Hyperliquid’s revenue generation and growth potential in Real World Assets (RWA) trading.