Hyperliquid’s native token, HYPE, which had been on an upward trend over the past few days, experienced a 20% price dip today, trading at $26.54, while its market cap dropped below $9 billion.

Hyperliquid (HYPE) surged to a record high of $34.96 on Dec. 22, rising from its airdrop listing price of $11 and achieving nearly 200% cumulative gains. Its market cap surpassed $11.5 billion at the time, securing a spot among the top 20 coins by market cap, according to CoinGecko.

Launched in June 2023, Hyperliquid DEX has gained traction due to its innovative approach to eliminating gas fees for transactions. The platform offers low fees on perpetual contracts and trade openings, with the revenue reinvested into the ecosystem through token buybacks or by supporting ecosystem vaults.

HYPE’s price rallied after one of the most highly anticipated token airdrops of the year. Hyperliquid distributed 310 million tokens to its users, marking the largest airdrop in crypto history.

However, the altcoin’s price has faced a setback due to growing concerns within its community, making HYPE the top trending coin on CoinGecko. HYPE dropped by 26% from its all-time high reached yesterday, hitting an intraday low of $25.77 on De. 23. The slump brought its market cap down to $8.87 billion, making it the 23rd largest crypto asset at press time.

Why did HYPE tank?

HYPE’s price dropped after community members noticed that a major whale, identified as X user laurentzeimes, began selling over 1 million HYPE tokens. 

The sales were executed using Hyperliquid DEX’s TWAP (Time-Weighted Average Price) mechanism, which splits large orders into smaller transactions over a set period to minimize slippage. So far, within the ongoing TWAP execution, the whale has sold 175,000 tokens.

The whale sell-off coincided with concerns over North Korean hackers actively trading on the platform, with cybersecurity expert Tayvano speculating in an X post that this activity might be an attempt to test a vulnerability in Hyperliquid’s security.

The expert noted that the issue is especially alarming given that Hyperliquid operates with only four validators, raising further concerns. 

Following the discovery, Hyperliquid has experienced over $42 million in USDC outflows — its largest since launch — likely exacerbating HYPE’s price plunge per data from Dune Analytics.

However, analysts remain optimistic despite the recent hiccups, predicting that HYPE could resume its climb and potentially reach a new all-time high.

In a Dec. 23 post, analyst CJ, with 92.8k followers, expressed a bullish outlook for HYPE, suggesting it could climb towards a $40 target if it breaks above the key $30–$32 resistance level.

He noted that while the short-term trend may appear bearish, a drop to $18–$22 could offer traders a strong buying opportunity. However, CJ added that if HYPE’s price rebounds to around $32.3 in the coming days, it would invalidate his prediction.

Previously, crypto.news analysts predicted a similar price target, stating that HYPE needs to rise above its all-time high of $34.8 to confirm a bullish breakout, potentially reaching $40.

This outlook is supported by Hyperliquid’s strong performance in the DeFi sector, where it leads the decentralized perpetual trading market with a weekly trading volume that peaked at $98.6 billion last week and a TVL that recently surpassed $3.4 billion for the first time this month, up from $188 million in October.