Is This the Start of HYPE's Bull Market? Looking at Hyperliquid

Hyperliquid (HYPE) a specialized Layer-1 protocol and decentralized exchange (DEX), suggesting it's poised for a substantial rally. 

This article delves into the core arguments supporting HYPE's potential bull run, analyzing the catalysts outlined by the analyst and exploring Hyperliquid's position in the competitive decentralized finance (DeFi) ecosystem.

Understanding Hyperliquid: A Specialized Layer-1 Decentralized Exchange

Hyperliquid is not just another decentralized exchange; it operates as a Layer-1 protocol specifically designed for perpetual futures trading. A Layer-1 protocol forms the foundational blockchain network (like Ethereum or Solana) that processes and finalizes transactions without relying on other chains for security. 

By building its own Layer-1, Hyperliquid aims to offer high throughput, low latency, and efficient execution for complex derivatives trading, directly on its native blockchain.

A decentralized exchange (DEX) allows users to trade cryptocurrencies directly with each other, peer-to-peer, without needing a centralized intermediary. Unlike traditional exchanges, DEXs operate on smart contracts, enhancing transparency and reducing counterparty risk. 

Hyperliquid's focus on perpetual futures trading—a type of derivative contract that allows traders to speculate on the future price of an asset without an expiry date—positions it in a high-growth and often highly profitable niche within the DeFi sector.

Read more:Looking at the Two Main Meme Coins on Hyperliquid: Can It Still Go Up?

The Bullish Case for HYPE: Seven Catalysts Outlined

Pseudonymous analyst "Flood," a widely followed voice with over 255,500 followers on the social media platform X, recently outlined a compelling case for Hyperliquid, even after its token (HYPE) printed a new all-time high of $39.68. 

According to Flood, HYPE remains "still cheap" when considering its robust growth trajectory in the decentralized exchange space. Here are the seven catalysts underpinning his bullish outlook:

1. HYPE Untapped Retail Demand

Flood highlights that many retail investors, often referred to as "normies," are currently "unable to buy" HYPE because they "cannot figure out how to get on-chain." 

This refers to the friction involved in navigating self-custody wallets, bridging assets, and using decentralized applications directly on a blockchain, as opposed to simply buying on a centralized exchange. Simplifying this on-ramp could unlock a massive wave of new capital.

2. Limited Centralized Exchange Exposure

HYPE's spot market is "not listed in any tier-one exchange" (referring to major centralized exchanges like Binance, Coinbase, Kraken, etc.). A listing on a top-tier CEX significantly boosts a token's liquidity, visibility, and accessibility to a much broader investor base, often leading to substantial price appreciation.

3. Exceptional Growth in Open Interest

The analyst argues that dismissing HYPE as expensive at its current price "is not pricing in any growth," despite Hyperliquid consistently growing its open interest by double-digit percentages week-over-week. 

Open interest represents the total number of outstanding derivatives contracts that have not yet been closed or settled. 

For a perpetual DEX, rapidly increasing open interest is a critical indicator of platform usage, trader confidence, and overall market demand.

4. Substantial Buyback Program from Revenue

Flood points to a significant figure of "$770,000,000 at present revenues of buybacks (market buys)." This implies that Hyperliquid is generating substantial revenue, which it then uses to purchase its own HYPE tokens from the open market. 

Buybacks are a tokenomics mechanism where a protocol uses its profits to reduce the circulating supply of its token, thereby increasing scarcity and potentially driving up its value for existing holders.

5. Exposure to a High-Growth, Profitable Sector

"Exchanges are the most profitable businesses in the entire crypto world," Flood asserts. By gaining exposure to Hyperliquid, investors are betting on one of the "fastest-growing" entities within this highly lucrative sector, specifically in the specialized and booming realm of decentralized perpetuals.

6. Favorable Tokenomics with No Vesting Pressure

A critical factor highlighted is the absence of "unlocks from private market investors, no vesting bags and no sweetheart deals." Unlocks and vesting bags refer to scheduled releases of tokens previously held by early investors (from private sales) or team members. 

These unlocks can often create significant selling pressure as long-term holders gain access to liquid tokens. The absence of such large, predetermined unlocks is a strong positive for price stability.

7. Dominance in Perpetual Trading Development

"Most importantly, builder codes," Flood states. He suggests that for developers building products that need to interact with perpetual trading, Hyperliquid is effectively the sole "venue to build on." 

This indicates a strong developer ecosystem and unique technical dominance, making Hyperliquid an indispensable platform for innovation in decentralized derivatives.

Read more: Why Is Hyperliquid Trending? Looking at the Recent Update and Price Analysis

HYPE Valuation Outlook and Price Targets

Based on Hyperliquid's reported market capitalization of $12.402 billion at the time of the analyst's comments, Flood's profit-taking target of a "$40 billion circulating" market cap implies a remarkable 222% upside potential. 

HYPE to USDT Perps Bitrue

It's crucial to note the distinction between circulating market cap (value of tokens currently in circulation) and fully diluted valuation (FDV) (total market cap if all possible tokens were in circulation). 

Flood explicitly states his target is based on circulating market cap, focusing on current liquid supply. 

Additionally, he highlights $100 as an important "psychological level" to be aware of, a round number price point that can act as significant support or resistance due to human trading behavior.

Read more: How to Buy Hyperliquid (HYPE)

Discover in-depth articles, expert analysis, and the latest market trends 

on Bitrue’s blog.

Ready to take your crypto journey to the next step?

Register now to Bitrue

Conclusion: Is HYPE Ready to Rally?

The arguments put forth by analyst Flood paint a robust bullish picture for Hyperliquid (HYPE). 

From unlocking new retail liquidity to its impressive growth in open interest, favorable tokenomics, and dominant position in developer infrastructure for perpetual trading, several fundamental catalysts align to suggest significant upward potential. 

While the ambitious price targets and the inherent risks of crypto investments necessitate caution, Hyperliquid's current trajectory and unique value proposition position it as a noteworthy contender in the evolving decentralized finance landscape. 

The question of whether this marks the definitive start of HYPE's bull market will ultimately be answered by continued platform growth and broader market dynamics.

Read more: Italian Brainrot Memes: Full Breakdown of Characters and Crypto Hype

Frequently Asked Questions (FAQ)

Q: What is a Layer-1 protocol?

A: A Layer-1 protocol is a foundational blockchain network that processes and finalizes transactions on its own chain, providing the core infrastructure (e.g., Bitcoin, Ethereum).

Q: What is a Decentralized Exchange (DEX)? 

A: A DEX allows users to trade cryptocurrencies directly with each other on a blockchain, without a central intermediary, often relying on smart contracts for execution.

Q: What does "open interest" mean in derivatives trading? 

A: Open interest refers to the total number of outstanding derivatives contracts (like perpetual futures) that have not yet been settled or closed, indicating market activity and liquidity.

Q: What are "buybacks" in crypto tokenomics? 

A: Buybacks occur when a project uses its revenue to purchase its own native token from the open market, often to reduce circulating supply or distribute value to holders, which can support the token's price.

Q: What is the difference between "circulating market cap" and "fully diluted valuation (FDV)"? 

A: Circulating market cap is the value of tokens currently in active circulation. FDV is the market cap if all possible tokens (including those not yet unlocked or vested) were in circulation.