HYPE Token Faces the "Sword of Damocles": Large Investors Reduce Holdings by $122 Million, Team Unlocks and Community Strikes Back

A crypto "Whale" withdrew $122 million worth of HYPE Tokens from the Hyperliquid ecosystem in just a few hours, triggering panic selling in the market. This mysterious investor held over $90 million in unrealized gains during a nine-month holding period. This large withdrawal coincided with the exit of well-known crypto figures Arthur Hayes and popular trader Ansem, both of whom expressed concerns over the massive token unlock scheduled to start on November 29. In the face of spreading bearish sentiment, the Hyperliquid community is fighting back, confident that its unique organic buyback mechanism and continuously expanding ecosystem will be enough to handle the impending supply pressure.

1. Bear Market Sentiment Spreads: Large Holders and Giants Successively Exit

On-chain data shows that a Whale identified as "Techno_Revenant" purchased 2.39 million HYPE at an average price of about 12 dollars per Token, and may liquidate its position at the current price of about 51 dollars. This withdrawal coincides with the high-profile exits of Arthur Hayes and popular trader Ansem, both citing concerns over the large Token unlock starting on November 29.

Hayes sold all of his 96,628 HYPE for $5.1 million, making a profit of $823,000. He warned that 237.8 million Tokens worth $11.9 billion would begin to unlock, creating a monthly selling pressure of $500 million over the next 24 months. As a result, the price of HYPE fell 12% to $49.20, although Hyperliquid's daily trading volume still exceeded $10 billion.

Despite the fact that the Token has risen over 660% since its launch, concerns about oversupply brought by the upcoming unlocking event are threatening to overshadow the platform's operational success.

As market volatility intensifies, Aster Exchange has increased leverage trading for HYPE Token to 300 times, raising speculation that major participants are positioning themselves for significant price fluctuations.

2. When the encryption whales turn bearish

Just a few weeks after predicting that HYPE would achieve a 126-fold increase by 2028 at the Tokyo WebX conference, Arthur Hayes reversed his bullish stance. The industry executive had tied his optimistic forecast to the growing ecosystem of Hyperliquid and the anticipated expansion of the stablecoin market, expecting the platform's annual fees to grow from $1.2 billion to $255 billion.

Hayes revealed through the analysis of its Maelstrom Fund the mathematical fact that the existing buyback mechanism cannot absorb the unlocking pressure. The analysis pointed out that only $85 million is expected for buybacks each month, while $500 million worth of tokens are unlocked monthly, leading to a supply surplus of $410 million each month that the market cannot absorb. The article from Maelstrom Fund questions whether developers facing "life-changing" massive tokens can resist the temptation to dump. The study also emphasizes the competitive threats from established exchanges and new platforms like Lighter.xyz, indicating that the challenges faced by Hyperliquid go beyond token economics.

Ansem also joined this "Great Escape," selling 10,126 HYPE Tokens worth $492,000, further intensifying the bearish sentiment among influential traders. Despite the strong fundamental indicators of the platform, the coordinated dumping by these well-known figures amplified concerns about institutional confidence in HYPE's recent outlook.

3. Community Counterattack: Can Organic Buybacks Turn the Tide?

Supporters of Hyperliquid rejected the external proposal to destroy 45% of the total supply, believing that the platform's existing mechanisms are sufficient to provide deflationary pressure. Community advocate Tobias Reisner dismissed these supply reduction proposals, calling them short-term price manipulation rather than sustainable improvements to the Token economics.

The platform operates through three organic burning mechanisms: spot trading fees, HyperEVM gas costs, and market auction fees. These usage-based burning mechanisms create a natural deflationary pressure that expands with platform adoption, rather than relying on arbitrary supply reductions.

Multiple assistance funds in the ecosystem automatically use protocol revenue to purchase HYPE tokens. Hyperunit generated $2.67 million in fees and used 98% of that for HYPE buybacks; while Hyperdrive created complex mechanisms to convert protocol revenue into token purchases and liquidity provision. Projects including D2 Finance, BasedOneX, and Pear Protocol have also established similar buyback plans, creating decentralized buying pressure throughout the ecosystem. BasedOneX alone generated $4.5 million in fees, with as much as 72% paid to affiliates, expanding the buyback network through revenue sharing.

The main wallet integrations from Phantom and Rabby are expected to bring additional institutional buying pressure, as these platforms stake HYPE Tokens for fee discounts. The cumulative effect of multiple aid funds and institutions can provide natural price support during the unlocking period. Decentralized autonomous Tokens like Hyperion's HYPD and HypeStrat's SONN continue to bid for millions of dollars in HYPE allocations, creating an additional source of demand independent of secondary market trading. These structured products offer long-term holding mechanisms, thereby reducing circulation supply pressure.

Community members believe that the organic growth achieved through a usage-based burning mechanism and protocol-driven buybacks creates a more sustainable token economics than a man-made reduction in supply. The ecosystem's decentralized purchasing mechanism can absorb unlocking pressure over time while maintaining fundamental value creation through platform expansion and fee generation.

Conclusion

HYPE Token is standing at a crossroads, facing a significant trust crisis and a test of tokenomics. On one hand, the exit of heavyweight figures represented by Arthur Hayes, along with the upcoming massive token unlock, poses a bearish threat akin to the 'Sword of Damocles', indicating that the token may face tremendous selling pressure. This concern stems from a simple supply-demand imbalance model, where the upcoming release supply far exceeds the current buyback capacity.

However, on the other hand, the Hyperliquid community is fighting back through its strong organic buyback mechanism and constantly expanding ecosystem. Their argument is that these decentralized, platform activity-driven deflationary pressures will be able to continuously absorb the unlocked Tokens in the long run, ultimately proving the sustainability of its tokenomics.

The future trend of HYPE will depend on the battle between these two forces. This is not only a price war but also a philosophical debate about the value creation model of decentralized projects: whether to believe in market sentiment dominated by a few whales and analysts, or to trust in a more resilient ecosystem driven by countless small transactions and protocol mechanisms. The unlocking event on November 29 will become a key touchstone, determining which narrative ultimately prevails.