HYPE skyrocketed to a new high of $62, and it’s not because of ETFs; it’s because Hyperliquid is using almost all its profits to buy back its own tokens.
Written by: Zennon Kapron, Foebes
Compiled by: AididiaoJP, Foresight News
Hyperliquid is basically using almost all trading fees to buy back its own HYPE tokens. This built-in mechanism has a much stronger impact on price pump than the newly launched spot ETFs.
On May 21, the price of HYPE broke through $62, hitting an all-time high. The market explanation, as usual, is that institutional money is flowing in. The first Hyperliquid spot ETFs just started trading a few days ago, and HYPE’s fully diluted valuation briefly surpassed Solana. Financial media is now telling the story of 'Wall Street finally discovering decentralized derivatives exchanges.'
But this story is incomplete and can even mislead us in understanding this rise. The main reason for HYPE's real increase is that Hyperliquid uses almost all its earned revenue to buy back its own tokens. This buyback mechanism is written into the protocol, runs continuously and automatically, and is almost unrelated to whether external investors are optimistic. The difference between viewing the current price as 'the market's ultimate judgment on the project' versus 'a mechanism-driven result' lies in truly understanding how this buyback operates.
The real buyer is the Assistance Fund.
Hyperliquid operates a mechanism called the 'Assistance Fund.' According to DefiLlama data, 99% of trading fees from perpetual contracts and spot markets flow into this fund, which directly buys HYPE on the open market. No board can vote to pause it; buybacks are the default behavior of the protocol's revenue model and are executed in every block and market environment.
The amount is so substantial it can independently drive the price. Since its launch, Hyperliquid has accumulated over 11.6 billion dollars in revenue, almost all of which has been used to buy back its own tokens. In just Q3 2025, the protocol repurchased 316.76 million dollars worth of HYPE. Few listed companies can return capital to shareholders with such intensity, and those that do need to deliberate on decisions each quarter. Hyperliquid has eliminated this decision-making — buybacks just happen.
There are two ongoing buy pressures supporting it.
The protocol itself is not the only programmatic buyer. Hyperliquid Strategies (listed on NASDAQ via a reverse merger, code PURR) was established solely to accumulate and hold HYPE, currently holding about 20 million tokens. The company recorded a net profit of 152.5 million dollars last quarter, almost all from unrealized gains on HYPE held on its balance sheet. A treasury company whose revenue fluctuates with the price of its held tokens constitutes a second ongoing buy pressure in the market, and the higher the price, the louder this buy pressure becomes.
The third flow of funds comes from the stablecoin layer. When USDC became the official quoted asset for Hyperliquid, the protocol returned up to 90% of the USDC reserves held by the platform for buybacks and ecosystem incentives. There are always billions of USDC on the platform, and the interest generated from these balances forms another nine-digit buy pressure annually. Three channels all point to the same token.
The underlying business is indeed solid.
If the underlying business isn't strong, buybacks are just spinning wheels, so the fundamentals are worth serious consideration. Hyperliquid has already captured a dominant share in the on-chain perpetual contract trading space, which is rapidly growing as traders seek places beyond centralized exchanges. Its cumulative perpetual trading volume has reached trillions of dollars, with fees flowing into the Assistance Fund from real trading activities.
This aspect sets Hyperliquid apart from many previous crypto projects — those projects relied on incentivizing users with their inflationary tokens to create false activity. Hyperliquid can earn nearly 1 billion dollars from real customer activity in a year, and its practice of returning this money to token holders is more honest than most projects in the industry. The point here is not that Hyperliquid is weak, but that the company and the token are two different entities, while the market currently prices the token as if they are the same.
How much did the ETF actually contribute?
Comparing the buyback machine with media headlines. Bitwise and others launched the first US HYPE spot ETF in May, attracting tens of millions in inflows in its first week. This is indeed real institutional money and a credibility endorsement for young assets, which is commendable.
But the scale is relatively limited. The protocol repurchases hundreds of millions each quarter, while ETF inflows are only in the tens of millions. The launch of the ETF made headlines because it fits the familiar narrative of 'Wall Street-certified crypto assets.' But the real price determinant is the Assistance Fund, which keeps working steadily even in weeks without ETF news.
The behavioral patterns of the two are different, and that's key. ETF demand reflects the external investors' choice to sell anytime; buybacks are the accounting result of perpetual contract trading. As long as trading volume holds, even if all ETF holders lose interest overnight, buybacks will still run at full speed.
The actual significance of buybacks for holders.
"Buyback" carries assumptions from the stock market that don't entirely apply to tokens. When listed companies repurchase stock, they reduce the circulating shares with cash, allowing shareholders to sell and take dollars.
The Assistance Fund doesn't return anything. It converts protocol revenue into HYPE and holds it on behalf of the protocol, thereby reducing circulation and supporting price. HYPE holders cannot redeem or request shares from the fund; the value created by the fund is reflected solely through one channel — the market price of the token, which is itself supported by ongoing buy pressure. Simply put, the assets owned by HYPE holders have their prices supported by ongoing buy pressure, and the scale of that buy pressure is determined by trading volume each quarter.
The flywheel turns both ways (risk).
This dependency is precisely where the structural risk lies. Buybacks driven by trading fees can never exceed the limits set by trading volume, and crypto trading volume is highly cyclical. The protocol's own data has shown this effect: quarterly buyback amounts fell from 316.76 million dollars in Q3 2025 to 255.05 million dollars in Q4, and then to 192.25 million dollars in Q1 2026. While HYPE reached new highs, this supporting buy pressure shrank by about 40%.
Price and momentum are moving in reverse, which is the part that the 'institutional money entering' narrative overlooks. In a true crypto bear market, perpetual contract trading volume shrinks significantly, leading to reduced buybacks, and the support disappears just when holders need buy pressure the most. This mechanism amplifies gains when prices rise and withdraws support when they fall. Currently, only the first half has been adequately validated in scale.
The comparison with Solana actually overestimates HYPE.
The claim that HYPE 'surpasses Solana' also needs the same scrutiny. The surpassing occurs on a fully diluted valuation basis, counting all tokens that will exist in the future. However, based on the metrics reflecting actual circulating market value, HYPE is still far below Solana, as a large supply of HYPE has yet to enter the market.
The unlock schedule is crucial for buybacks. As locked supply gradually enters circulation, the Assistance Fund must absorb increasing potential selling pressure to maintain the price. The flywheel needs to keep accelerating in front of a larger circulating supply. If trading volume slows while circulating supply increases, the pressure will compound.
How to price a token that 'buys itself back'?
Hyperliquid remains one of the most profitable projects in the crypto space, with revenue levels that most Layer 1 blockchains struggle to reach, and using revenue for buybacks is a reasonable way to reward holders. Arthur Hayes set a target of 150 dollars in August, and from a mechanistic perspective, this target is self-consistent. Technical analysts believe the token is overbought, which also aligns with the mechanistic logic.
The most honest statement is: The bullish and bearish arguments for HYPE are essentially the same sentence. Its price is mechanically bound to Hyperliquid's trading volume — trading volume generates buybacks, and buybacks support the price. Investors buying HYPE at historical highs are essentially leveraging a single variable: whether this exchange's perpetual contract trading volume can continue to rise.
This is much narrower than betting on the entire DeFi space, and significantly narrower than betting on a general-purpose blockchain like Solana. The historical high chart looks as if the market has drawn conclusions, but for this token, what the market sees is largely its own reflection.