Hyperliquid cryptocurrency: Why Multicoins bet heavily on increased HYPE burn

Key Insights

Multicoin executives reveal the reasons behind the company's decision to invest heavily in Hyperliquid crypto assets. One of the main reasons is the same liquidity of perpetual contracts as centralized exchanges such as Binance.

The new round of HYPE token destruction brought the cumulative total destroyed to 48.5 million pieces, accounting for about 4.8% of the total supply. In the past few months, Hyperliquid crypto assets have become one of the most attractive options for institutional investors. Among them, Multicoin's history of holding positions in HYPE's crypto assets can be described as ups and downs.

Multicoin is one of the largest institutional holders of Hyperliquid crypto assets. Earlier this year, the company held a peak position of approximately 4 million HYPE tokens. Since then, Multicoin has sold a large number of Hyperliquid positions, with about 700 million remaining (Note: There may be unit or order of magnitude differences in the original data here, which is literally translated according to the original text). But what is more noteworthy is why the company originally purchased such a large number of HYPE tokens.

Spencer Applebaum, head of venture capital at Multicoin, pointed out that the company began embracing Hyperliquid crypto assets after its core exchange products matched with major exchanges. This includes major centralized players such as Binance. Source: Grayscale

Applebaum also pointed out that Hyperliquid's liquidity strategy and outsourced distribution model have enhanced the appeal of HYPE's crypto assets. Although Multicoin significantly reduced its HYPE position, the executive still said that HYPE remains one of its largest crypto asset positions.

Hyperliquid crypto assets destroyed accounted for 4.8% of the circulating supply

HYPE crypto assets are also favored by retail and institutional investors due to their deflationary nature. Interestingly, this week ended with another round of destruction, removing approximately $2.65 million worth of HYPE tokens from the market.

Onchain Lens data showed that Hyperliquid purchased 32,770 HYPEs on Saturday for an average price of US$81.01, and the tokens were subsequently destroyed. So far, the agreement has removed 48.57 million tokens from circulation, or approximately US$3.82 billion at current value. Hyperliquid Cryptographic Asset Token Destruction Update| Source: Onchain Lens (X)

The number of HYPE tokens destroyed is rapidly approaching 5%. Currently, the circulation of this cryptocurrency is approximately 251.7 million pieces. However, it is worth noting that this represents only a small portion of its total supply of 971.8 million pieces.

This is another factor driving the growth of institutional demand for Hyperliquid crypto assets. Although these factors contribute to the need for health, there is still much room for institutional funds to flow in.

For background reference, the cumulative net inflow of Hyperliquid ETF to date has reached US$336 million. In other words, institutional needs have not yet reached their full potential.

Hyperliquid crypto assets fall back after hitting record highs

HYPE crypto assets ended a bearish week with prices falling nearly 10%. Interestingly, this correction came after it hit a new all-time high of 89.6.

Considering that despite setting a new high, the RSI indicator has fallen sharply, this correction in HYPE prices is not entirely unexpected. This clearly shows that the bulls are losing momentum.

In addition, HYPE prices formed a bearish divergence on the weekly chart. This may signal a further correction is coming. Hyperliquid Price Trend| Source: TradingView

Negative Hyperliquid ETF funds flow signals indicate that some institutional investors have begun to take profits.

Overall spot capital flows also suggest that the profit-taking narrative may be dominating. The previously observed strong spot inflows in August have now weakened. Hyperliquid Crypto Asset Spot Inflows| Source: CoinGlass

In addition, outflows have become more common since early September, underscoring the shift in market winds. Whether this will be enough to erase more recent gains remains to be seen.

As for the derivatives sector, open interest fell to US$2.96 billion at press time from a high of US$3.75 billion in August. This shift reflects a change in mood. In other words, Hyperliquid crypto assets are currently stalled in their pursuit of triple-digit prices.

This article is for information purposes only and does not constitute financial or investment advice. Cryptocurrency investing involves risk, and past performance does not guarantee future results. Readers should conduct independent research before making investment decisions.