Written by: Xiaobing

On August 24, HYPE hit a historic high of $83.27 and then fell back to around $77.5. The market capitalization is approximately $19.5 billion, ranking it among the top 15 in crypto assets. Since the beginning of the year, starting from $20, HYPE has increased nearly four times in eight months.

Five days later, on August 29, Hyperliquid will execute the largest monthly token unlock since the TGE in November 2024. According to data from Tokenomics.com, this unlock will release about 14.18 million HYPE, accounting for 1.4% of the total supply, with a current value of approximately $1.2 billion, equivalent to 2.7% of HYPE's circulating market cap.

Of this, 46.6% (about $560 million) is allocated to insiders (early investors and core contributors), 46.3% is allocated to the community (incentives, airdrops, etc.), and 7% is allocated to the Hyper Foundation. The next unlock of the same scale is scheduled for September 29, followed by monthly releases, with the unlock calendar extending to November 2029.

A token that has just set a historic high, can it absorb the massive incoming supply?

Unlocking does not equal selling

First, let's correct a common cognitive bias: token unlocking does not equal token selling.

A tracking report released by Tokenomist in April shows that there is a significant gap between the actual unlocking behavior of Hyperliquid and the theoretical value. As of March 2026, approximately 405 million HYPE have been unlocked at the contract level, but only about 3.19 million have been claimed and circulated, with a claiming rate of only 0.79%. In the five-month data from November 2025 to March 2026, the highest monthly claiming rate did not exceed 17.6% (in the first month), while the lowest was only 1.4% (February 2026).

This data indicates that Hyperliquid's core contributors and early investors have hardly liquidated on a large scale, with the vast majority of unlocked tokens remaining in the contract and unclaimed.

However, whether this historical pattern can continue now that HYPE is nearing its historic high is a completely different question. The higher the price, the greater the temptation to cash out. Those who did not claim between $20 and $60 may make different decisions when faced with $80.

Protocol revenue vs. unlocked supply

The most unique token economic mechanism of Hyperliquid is the Assistance Fund.

This fund uses 97% to 99% of protocol revenue to automatically purchase HYPE on the open market, executing daily, without the need for governance voting, and not relying on the subjective judgment of the team. The community voted at the end of 2025 to formally consider the tokens held by the fund as destroyed.

This buyback mechanism has almost no precedent in the crypto industry.

As of July 2026, the Assistance Fund has cumulatively purchased approximately 45.7 million HYPE. Annualized, the buyback intensity accounts for about 7% of the market cap, which is 4 to 5 times the Ethereum EIP-1559 burn rate, and far exceeds BNB's quarterly burn intensity. The protocol's annualized fee income is about $1.3 billion, with monthly income averaging between $58 million and $80 million, and daily buyback amounts ranging from about $1.8 million to $2 million. Since August 2025, the Hyperliquid network has generated approximately $800 million in net income, with HyperCore accounting for 95% of this.

Now let’s do some calculations.

The value of the tokens unlocked on August 29 is approximately $1.2 billion. The monthly buyback amount of the Assistance Fund is approximately $60 million to $80 million. If all unlocked tokens were to enter the market for immediate sale, the protocol's buyback could only absorb about 6% to 7% of that. The unlocked supply is approximately 15 times the buyback demand.

From a pure supply-demand perspective, this ratio is unfavorable for HYPE. The protocol's buyback cannot counterbalance the full unlocking sell pressure in the short term.

However, the assumption of a "full sell-off" is extremely unrealistic. Combining the historical claiming rate of 0.79% and past holding behaviors, the actual sell volume entering the market may be only a small fraction of the total unlocked amount. If the actual selling pressure is controlled to between 5% and 10% of the unlocking amount (i.e., $60 million to $120 million), the protocol buyback would have the capacity to significantly offset or even fully absorb it.

Prices are already priced in

HYPE rose from about $54 at the end of July to $83 on August 24, increasing nearly 54% within a month. The driving force behind this surge comes from several directions.

The protocol's fundamentals continue to be strong: daily trading volume remains stable between $6 billion and $8 billion, with a holding amount of about $3.5 billion, and monthly fee income often exceeding that of Ethereum and Solana among crypto protocols. The HYPE ETF launched by Bitwise has become one of the largest single crypto asset ETFs in the world, bringing in additional institutional funds. Trump expressed at a White House crypto conference that the CFTC is promoting Hyperliquid's compliant entry into the US market, which unlocks the expected premium for HYPE's access to the US market.

These positives have already been fully reflected in the price. The historic high of $83 means the market has already incorporated the most optimistic narratives into its valuation. At this position, the arrival of a $1.2 billion unlock leaves little room for unexpected positive news, but also little room for error.

Structural risks

Hyperliquid's buyback mechanism is pro-cyclical. A vibrant market → high trading volume → high fee income → accelerated buyback → reduced token supply → price increase → attracting more traders. This flywheel operates almost perfectly in a bull market.

But the reverse is also true. If the market enters a prolonged downturn, trading volume shrinks, fee income declines, and the buyback amount shrinks accordingly. Meanwhile, the tokens continue to unlock each month according to a fixed calendar, and the supply side will not pause due to a quiet market. Reduced buybacks + unchanged unlocking = net supply increase.

Hyperliquid has not yet experienced a true long-term bear market test. The brief correction in February 2026 does not count as a stress test. If the crypto market sees a drop of over 50%, whether HYPE's buyback flywheel can maintain price support while operating in reverse is an unverified proposition.

Currently, HYPE's circulating supply is about 222 million (22.2% of the total of 1 billion), with 48% still locked. Even before the unlocking calendar is completed, the stable monthly supply increment will continue to dilute existing holders. At the current unlocking pace of about 14 million per month and the current circulating amount, the new monthly supply will account for about 6% of the circulating amount. This is not a one-time "unlock event," but a supply expansion cycle that will last for several years.

Whether protocol revenue can continue to grow enough to offset this supply expansion through buybacks is the core variable of HYPE's medium- to long-term valuation. Based on current data, buybacks cover roughly 5% to 7% of the monthly unlocking amount, indicating that the critical point for "buybacks > unlocks" is still a long way off. Unless Hyperliquid's trading volume and fee income increase by an order of magnitude, HYPE will remain a net inflationary token in the foreseeable future; the buyback mechanism can only slow the rate of inflation, not reverse it.

At the historic high of $83, HYPE's bulls are betting on sustained trading volume growth, successful US market access, and insiders continuing not to sell after unlocking.

If all three conditions are met, HYPE can absorb the supply shock; if any one condition loosens, the pullback space will be significantly amplified by the unlocked supply.