Hyperliquid Slashes $1B Token Supply Amid HYPE Price Drop

Hyperliquid, a decentralized perpetuals exchange, announced the reduction of its HYPE token supply by $1 billion. This move comes as HYPE has experienced a significant price drop, reaching seven-month lows in December 2025.

Price Action Details

HYPE is currently trading at $0.55, reflecting a 24-hour decline of 3%, a 7-day drop of 10%, and a 30-day decrease of 25%. Key support levels are observed at $0.50 and $0.45, with resistance at $0.60 and $0.65. Trading volume has decreased by 40% compared to the average over the past month, impacting the market cap, which now stands at $550 million.

Driving Factors

The primary catalyst for the HYPE price decline is the reduction in trading volumes on the Hyperliquid platform, which have stagnated at around $200 million daily compared to $500 million earlier in the year. On-chain data from Dune Analytics shows a decrease in active addresses and transaction counts, further supporting the narrative of reduced platform activity. Significant whale transactions amounting to $10 million were observed moving HYPE to centralized exchanges, potentially adding selling pressure. The news of the token supply reduction was intended to counteract these trends but has not yet reversed the market sentiment.

Broader Market Context

Compared to major cryptocurrencies, HYPE's performance has been weaker than Bitcoin and Ethereum, which have seen gains of 5% and 3% respectively over the past month. The DeFi sector, as measured by DefiLlama, shows a total value locked (TVL) decrease of 15% over the same period, indicating broader sector challenges. The current Fear & Greed Index stands at 35, reflecting a market sentiment of fear. Analysts at The Block suggest that while the token supply reduction is a positive step, it may take time for the market to recognize the long-term benefits.

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