Will burning $912 million worth of HYPE help the price reach $40?

The HYPE token of Hyperliquid has experienced highly volatile moments when the price hit the $50 level nearly two months ago, amid increasing selling pressure in the market. Since then, HYPE has continuously traded in a downtrend channel, recording a local bottom at $22.

As of now, the HYPE price is trading at $23,942, down 1.39% for the day and 11.9% for the week, reflecting strong selling pressure from the market.

In response to this situation, Hyper Foundation has had to intervene to support the HYPE value.

Hyper Foundation burns 37 million HYPE

In a notable effort, Hyper Foundation has burned 37 million HYPE tokens after receiving 85% approval from governance voting based on staking weight. This amount of tokens, valued at over $912 million, has been confirmed to be burned and transferred to an inaccessible address, officially removing them from circulating supply.

Since December 2024, Hyper Foundation has continuously carried out HYPE token buybacks, increasing its holdings from 9.3 million to 37.51 million tokens. On average, the fund spends about $1.5 million daily to buy back tokens; just last week, they spent $12.4 million to accumulate an additional 498,340 tokens.

Source: ASXN The burning of this large amount of tokens has helped reduce the total circulating supply by 11%-13%, tightening the tokenomics structure and increasing scarcity for HYPE.

Source: ASXN This move is expected to reduce selling pressure, absorb market sell-offs, and lay the groundwork for a price rebound. History shows that deflationary measures often have a positive impact on token prices.

Spot market shows positive signals

Although HYPE is under pressure, activity in the spot market indicates signs of improvement. Recently, the amount of HYPE withdrawals from exchanges has consistently exceeded deposits, keeping the spot cash flow in positive territory. At the time of reporting, the cash flow stands at -$5.1 million, reflecting strong outflows.

Source: CoinGlass Usually, when deposits into exchanges decrease, selling pressure on the asset also diminishes, opening opportunities for an upward trend.

Can HYPE recover strongly?

According to analysis by Coinphoton, the token burn has helped soothe market sentiment, as reflected in the Average Bullish Move index. For the first time in over two weeks, buying pressure has surpassed selling pressure, with an average Uptrend Index of 17, while the Bearish Move index has decreased to -9.

Source: TradingView The current market structure shows that buying momentum is dominant, although selling still exists. If this trend continues, HYPE has a strong chance to recover, regain the $30 level, and target $40.

Conversely, if the deflationary measures are not strong enough, HYPE could lose the $20 support level and continue declining toward $19.