Hyperliquid: Can $912 mln in token burns help HYPE target $40?

Hyperliquid has faced challenging times; it touched $50 nearly two months ago amid rising market pressure. In fact, HYPE has traded within a descending channel, touching a local low of $22.

As of this writing, HYPE traded at $23.942, down 1.39% on the daily chart and 11.9% on the weekly chart, reflecting sharp downward pressure. 

With the altcoin under intense pressure, the Hyper Foundation was forced to step in and absorb some of it. 

Hyper Foundation Burns 37 million HYPE

In a significant boost for Hyperliquid, a stake-weighted voting approved the burn of 37 million HYPE tokens. 

As such, the Hyper Foundation declared tokens worth over $912 million in its Assistance Fund Addresses as burned. 

This address has accumulated Hyperliquid [HYPE] tokens through buybacks since December 2024. The total tokens held jumped from 9.3 million to 37.51 million over this period. 

Source: ASXN

In fact, Hyper Foundation has remained consistent in its token buybacks, spending an average of $1.5 million daily. For example, over the past week, the team spent $12.4 million to accumulate 498.34k tokens. 

The decision to burn these tokens followed an 85% approval in a stake-weighted governance vote.

These tokens now sit in an inaccessible address, thereby officially cutting 11-13% of the total circulating supply and tightening tokenomics. 

Source: ASXN

This move increased HYPE’s scarcity, potentially reducing sell pressure and absorbing pressure from sellers amid a market dip. Historically, such deflationary measures have pushed token prices higher.

Spot market feels the boost

While HYPE has struggled recently, activity in the Spot market has signaled a cooldown. In fact, exchange outflows have consistently outpaced inflows for the past consecutive days.

As such, the altcoin’s Spot Netflow has remained positive over this period. At press time, Netflow was -$5.1 million, indicating substantial outflows.

Source: CoinGlass

Usually, reduced exchange inflows have reduced pressure on an asset, further strengthening potential upward movement.

Can HYPE rebound this wave?

According to AMBCrypto, Hyperliquid token burns have helped ease market tensions, as evidenced by the Sum of Bullish and Bearish Moves.

For the first time in over two weeks, buyers have outpaced sellers with Average Bullish Move hiking to 17, while Bearish Move dipped to -9.

Source: TradingView

Such a setup suggests strong buyer momentum, although sellers remain in the market. These market conditions position HYPE well for a recovery if the buyer’s momentum is sustained.

Therefore, if token burn impacts are strongly felt in the market and spot demand awakens, HYPE could reclaim $30 and target $40.

However, if the recent deflationary attempt fails, HYPE could breach $20 support and drop to $19.