Hyperliquid faces a critical juncture as The Hyper Foundation proposes burning 1 billion HYPE tokens while December unlocks threaten to add selling pressure. The token traded below $30 but maintained a 3% daily gain as traders weighed competing supply dynamics.
What Happened: Foundation Burn Proposal
The Hyper Foundation proposed burning 1 billion HYPE tokens currently held in the Assistance Fund. Validators will signal governance intentions on Dec. 21, with voting results expected Dec. 24 when staking begins.
The Assistance Fund holds more than 1 billion tokens valued above $37 billion at current prices.
A successful vote would significantly reduce total and circulating supply, creating a potential supply shock that historically drives prices higher when demand remains constant.
However, current market conditions show declining price action and reduced trading activity. The token breached the $35 support level after holding that zone through five previous tests.
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Why It Matters: Supply Dynamics
HYPE dropped approximately 56% from recent highs to $27, approaching critical support at $20. That level represents both a psychological threshold and a previous higher high, making it a potential reversal zone if buyers defend the area.
Trading activity declined sharply as Perpetual Futures volume fell from 57% of market share to 16%. Total trading volume dropped from a mid-October peak of roughly $30 billion to approximately $8 billion, while Spot Volume decreased from above $1.2 billion to around $200 million.
December token unlocks complicate the supply picture. 10 million additional tokens will enter circulation this month, bringing total November-December unlocks to 20 million tokens.
While the proposed 1 billion token burn would dwarf the unlock amount, the new supply could generate short-term selling pressure that offsets any immediate price benefits from reduced total supply.
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