Hyperliquid’s HYPE token faces pressure after withdrawal freeze ends

Hyperliquid is a decentralized exchange specializing in perpetual futures contracts. The HYPE token, ranked 11th by market capitalization, is down 21.6% from its September 23 peak of $98 and has fallen 8.8% in the last month. While it remains over 200% higher year-to-date, the token’s recent performance has nearly erased gains made since October 25.

The weekly decline coincides with a period where Binance gradually restored withdrawals for various assets, beginning November 1. HYPE withdrawals were only reinstated on November 8, following a freeze that prevented users from moving their tokens off the exchange or onto Hyperliquid’s blockchain.

The resumption of withdrawals introduces uncertainty. While some holders may choose to stake their HYPE on Hyperliquid or store it in personal wallets, potentially reducing available supply, others might sell on different exchanges, adding to the circulating supply and potentially impacting the price near the $75 level.

Adding to the downward pressure, U.S. Hyperliquid ETFs experienced net outflows of $8 million on November 6, with the Bitwise Hyperliquid ETF (NYSEARCA: BHYP) seeing $7.1 million in outflows and the 21Shares Hyperliquid Staking ETF (NASDAQ: THYP) losing $0.9 million. This indicates reduced demand for HYPE to back ETF shares.

Conversely, Hyperliquid’s daily token buyback program, funded by trading fees, has provided ongoing support. The exchange’s Assistance Fund utilizes these fees to purchase HYPE on the open market, even as other holders sell. Despite the price decline, the exchange generated $2.8 million in fees on November 7, continuing to fuel the buyback.

HYPE is currently trading below its 20-day and 50-day simple moving averages, suggesting a prevailing selling trend. However, it remains above its 200-day moving average, indicating a longer-term uptrend. Bitcoin and Ethereum have also experienced declines, but HYPE’s performance has been comparatively weaker, potentially due to the extended withdrawal freeze and ETF outflows.

The token’s ability to sustain a price above $75 will depend on whether Binance users choose to stake or sell their HYPE, whether ETF investors return, and the effectiveness of the buyback program. A drop below $75 could test the $70 level, while a rebound above the 20-day moving average would signal a potential recovery.