After rallying to a new all-time high when most of the crypto market struggled, Hyperliquid (HYPE) has finally entered a pullback. The correction has split investors into two camps. Some see it as a chance to buy at a discount. Others said the rally has run its course.
According to one analyst, the real answer isn’t on the price chart but in Hyperliquid’s underlying buyback model and upcoming catalysts.
Buybacks Still Support HYPE
The analyst explains that Hyperliquid remains the largest on-chain perpetual futures exchange, generating real trading fees that fund HYPE buybacks. Since launch, the protocol has spent more than $1 billion buying back HYPE, removing over 40 million tokens from circulation.
However, there’s an important catch. These buybacks depend on trading activity, meaning buying pressure falls when trading volumes slow. Quarterly buybacks have already dropped from over $300 million to below $200 million, even as HYPE continued reaching new highs.
A New Catalyst Could Arrive Later This Year
The analyst said the next growth phase may come from Hyperliquid’s newly approved second buyback mechanism.
Under the proposal, around 90% of the interest earned on the platform’s $6 billion+ USDC reserves will also be used to buy HYPE. Estimates show this could generate up to $200 million in additional annual buying pressure. This would start once the program begins around the fourth quarter.
Even so, investors should also watch the risks. Monthly token unlocks will continue through 2027. ETF demand has started cooling. The new buyback depends on interest rates remaining relatively high. Furthermore, regulatory uncertainty around protocol-funded buybacks still exists.
Rather than focusing only on price movements, the analyst says investors should monitor USDC deposits, trading volume, protocol fees, and the rollout of the second buyback system. Those metrics, rather than short-term volatility, are likely to determine whether Hyperliquid can maintain its long-term momentum.
ETF demand has cooled. HYPE ETFs enjoyed 16 consecutive days of inflows after launch but later recorded their first day of outflows in early June. This suggests ETF-driven demand is not guaranteed.
HYPE Price outlook
On the flip side, the analyst said that she is not convinced that HYPE’s rally is over. Instead, she sees the current dip as a stress test before the second buyback program begins. She says investors should focus less on short-term price moves and more on USDC balances, trading volume, buyback activity, and token unlocks. Q4 is likely to be the key period for HYPE’s next major move.
Meanwhile, HYPE is trading at $63.43, down 2.5% over the past 24 hours. The token has recorded $556.2 million in daily trading volume. It also remains the 9th-largest cryptocurrency by market capitalization, valued at nearly $16 billion.
