Hyperliquid's HYPE Token: What is behind the frenzy from $2 to $51?

Recently, there is an unavoidable topic in the crypto market - Hyperliquid's HYPE Token. This thing skyrocketed from a price of $2 at the end of last year to $51.07 in August this year, with an outrageous rise. However, if you look closely at the logic behind it, you will find that it is not purely a speculative bubble.

Trading volume is the real ace

The daily trading volume of Hyperliquid DEX can reach 30 billion USD, what concept is this? In the decentralized exchange space, this is simply astronomical. What does a large trading volume mean? More transaction fees. And the smartest design of HYPE is: to use 99% of the transaction fees to buy back Tokens.

This is not a new trick, but the execution is top-notch. Continuous buying pressure = continuous price support. As long as the trading volume exists, there will be someone to take on the HYPE.

Big players are celebrating, retail investors are watching.

To be honest, this round of rise is mainly driven by whales and large holders. On-chain data shows that large buy orders and strategic staking have supported most of the increase. What does this mean? High concentration means higher risk of sell-off.

The most interesting part is the airdrop distribution. 3.1 billion HYPE tokens were airdropped (accounting for 31% of the total supply), worth 1.6 billion dollars at the time. It sounds generous, but the problem is: a few lucky ones grabbed the lion's share. The median airdrop amount is far below the average, which is typical wealth concentration. Analysts also pointed out that the participation on Chinese social media was insufficient, which may limit broader adoption.

Can Layer-1 self-built chains be compared to CEX?

Hyperliquid runs on its own Layer-1 chain, offering on-chain CLOB (Central Limit Order Book), low fees, and high-speed trading. The technical indicators are indeed good, but the ecosystem expansion has cooled down—there is a lack of cross-chain bridging and few external integrations. This means that the depth of the ecosystem is limited.

Can the price rise further?

Analysts have given a variety of target prices: mid-term $100, long-term over $200. But these predictions are based on one assumption - that trading volume continues to grow. If FOMO fades and user retention cools, this story can easily collapse.

Hyperliquid deliberately avoids VC funding and takes a community-driven approach. This sounds very Web3, but it has indeed suffered in terms of ecosystem expansion and financing.

Bottom line

The rise of HYPE does indeed have logical support (trading volume + buyback mechanism + big player promotion), but how long can this logic last? It depends on whether Hyperliquid can solve two core issues: user retention after airdrop and real expansion of the ecosystem. Is it now betting on continuous growth in trading volume or betting on FOMO reaching its peak? It's up to each of you to calculate.