Hyperliquid Labs has clarified that recent claims of insider sell-off of HYPE are from an ex-employee.
The project added that team members and contractors are prohibited from engaging in leveraged trading on the token or face immediate termination.
The project said that the strict policy is because “the community deserves a team that is fully aligned with the long-term health of the ecosystem.”
Will token burns boost sentiment?
The token has been under double pressure from the broader market correction and monthly unlocks that will continue until late 2027.
One of the flywheels and token accrual has been automated buybacks from generated fees. So far, the project has bought 27.4 million HYPE tokens, or 11% of the circulating supply.
All the acquired tokens and future buybacks will be burnt after the recent proposal was passed by validators.
Put differently, 11% of the supply, worth $942 million HYPE, has been removed from circulation, reinforcing long-term deflation.
Speculative interest tanks 50%
Even so, the speculative interest in late 2025 has declined by 50% from over $2 billion to around $1 billion, as illustrated by the Open Interest.
This underscored the bearish sentiment in Q4 2025 across the Futures market. Notably, the muted appetite may cap a strong rebound in the near-term.
That being said, there was a slight recovery following the passage of the token burn proposal. HYPE bounced 4% in the past 24 hours and teased the $25 level.
However, near-term bullish reversal could be confirmed only after a decisive reclaim of $28.
Meanwhile, despite the sluggish rebound, an analyst pointed out that the token could reverse recent losses, citing past price action near the average cost basis of token buybacks.
The last time the price slipped to the average buyback price of around $13 in Q1 2025, HYPE exhibited strong uptrend momentum. At press time, the current correction has again tagged the average cost basis.
Overall, a bullish recovery could be accelerated by a broader market sentiment reset. In the meantime, any more Bitcoin losses could still cap upside rallies, especially ahead of the monthly unlocks.
Final Thoughts
- The Hyperliquid project distanced itself from insider sell-off claims, stating that the recent dump was made by an ex-employee.
- The project has approved the burning of tokens acquired by buybacks, setting HYPE deflationary flywheel in motion.
