The cryptocurrency community is rife with talk about a possible 50% drop in the value of Hyperliquid's HYPE token, as a series of negative signals converge. Although the platform recently marked a
$1 billion fundraising milestone
to strengthen its decentralized derivatives network, market watchers and traders are raising concerns about an uptick in short selling, evolving market conditions, and intensifying competition.
One of the main drivers behind the bearish outlook is the surge in short positions taken by institutional investors. On-chain analytics from HyperInsight indicate that two wallets associated with
Abraxas Capital
have accumulated a total of $760 million in short bets on Hyperliquid, with unrealized profits surpassing $50 million. These wallets have notably ramped up their short exposure to
Bitcoin
(BTC) and
Ethereum
(ETH) over the last week, with
BTC
shorts alone climbing from $124 million to $280 million. While most of these positions are in the green, one
ETH
short at 0x5b5 has dropped 54%, pointing to possible turbulence ahead.
Retail traders are also taking bearish stances. A notable on-chain trader,
Calm Down and Open Single King
, has seen their BTC and SOL short trades rebound to a 108% ROI, placing them sixth on Hyperliquid’s SOL contract leaderboard. This trader’s approach—scaling back parts of their $7.6 million BTC and $5.9 million SOL shorts—mirrors a broader move toward reducing risk as volatility picks up. Experts warn that such concentrated shorting could intensify downward momentum for HYPE, especially if leveraged trades spark a wave of liquidations.
Adding to the worries is the ascent of rival platforms. Defillama data shows that
pump.fun's protocol revenue
soared to $1.42 million in the past day, overtaking Hyperliquid’s $1.18 million. This shift in user engagement underscores the mounting competition in decentralized finance (DeFi), with pump.fun leveraging speculative activity and social media-fueled liquidity. For Hyperliquid, which depends on institutional trust and substantial trading activity, ceding ground to up-and-coming platforms could weaken its position in the derivatives market.
Even with these challenges, Hyperliquid’s recent $1 billion capital injection is being promoted as a positive sign. The funds are aimed at boosting token reserves and enhancing liquidity, with supporters pointing to the platform’s $317 billion monthly trading volume as evidence of strong demand. However, skeptics argue that this influx of money may have pushed HYPE’s price above its true worth. With $305 million in reserves and 12.6 million tokens in circulation, the token’s real value remains debated, especially as short-term speculation dominates the market mood.
Broader market forces also reinforce the bearish perspective.
Forrester's 2026 technology predictions
suggest that 25% of planned AI investments by businesses will be postponed due to unmet expectations, a trend that could have ripple effects across the crypto industry. While Hyperliquid isn’t directly linked to AI, a wider pullback in risk-taking and capital deployment could cool interest in speculative tokens like HYPE.
