The Hyperliquid decentralized exchange has been making it into headlines recently and not by coincidence. Recent findings revealed that some of the biggest whales in crypto have been using it to execute highly leveraged trades.
This growing Hyperliquid popularity has been trickling down into its native token HYPE, which has been enjoying an explosive performance. For context, the token just concluded an impressively bullish week during which it rallied by as much as 50% from weekly low to weekly high.
The rally last week was a continuation of the bullish momentum that kicked off in the second week of April. However, it is worth noting that price was deep in overbought territory at the time of writing, suggesting that holders might be incentivized to take profits.
The HYPE token exchanged hands above $37 at press time. This was about a 12% rally away from achieving a new all-time high.
Hyperliquid Sees Record High Levels of Open Interest
Speaking of all-time highs, HYPE’s open interest crossed above the $1 billion level for the first time last week, hence another milestone. Its OI hovered slightly above $1.2 billion at press time.
The record high open interest levels underscore the possibility of high liquidation levels. Just in the last 24 hours alone, short liquidations soared surpassed $753,000 on Coinglass while longs were almost a third, highlighting the widening gap.
Key industry figure, Arthur Heyes took note of a $23 million short position recently liquidated, resulting a significant loss for the trader. The outcome underscored the high volatility that was linked to the massive spike in open interest.
The massive liquidation signaled that HYPE was still in favor of the bulls and holders were not in a rush to sell. Perhaps a sign of optimism in anticipation of a rally into new ATHs.
Lookonchain analysis revealed that whales have been propping up HYPE price through aggressive buying. Two whales acquired over $10 million worth of the token at around the $34 price level on Saturday, fueling its momentum and triggering liquidations.
It is worth noting that the overheated demand suggests that the token might be approaching a potential pivot point. Whales appeared determined to push price higher likely to cause liquidations and potentially trigger a short squeeze event.
The demand for the token may have also been linked to the Hyperliquid DEX performance. This warranted a look under the hood.
Hyperliquid has Been Firing on All 8 Cylinders
To understand HYPE token demand, we explored the level of movement within its ecosystem. According to DeFiLlama, token volume concluded the week with a bang after clocking $570.5 million on Saturday.
For context, the token volume’s lowest daily token volume so far this month was about $78 million. This was a reflection of the heavy levels of activity especially as market excitement pushed coins such as Bitcoin to new highs.
While still on network activity, Hyperliquid also saw significant growth in other key areas. For example, its TVL (green) grew from $254 million on 7 April to $455 million at press time.
DEX volume (blue) growth was even more impressive. It bottomed out at $42.67 million in April and surged above $590 million on 23 May.
Based on the above data, it was evident that HYPE demand was tied to the rising level of open interest in the market. Hyperliquid has been capitalizing on the demand for derivatives in the market. And because it operates on its own layer 1 network, low fees contributed heavily to its appeal.
