HYPE recently broke through $67, setting a new all-time high, with a market capitalization exceeding $14 billion. The core factor driving this surge is not just heightened sentiment, but also the continued increase in Hyperliquid trading activity, with protocol revenue and token buybacks providing more direct support.

Transaction growth drives buybacks

As trading volume increases on the platform, more transaction fees flow into the Hyperliquid ecosystem. A portion of this revenue is used for automatic buybacks of HYPE, thus linking token demand with platform usage.

The report mentions that the protocol had previously used billions of dollars in revenue to buy back HYPE and permanently removed more than 45 million tokens from circulation. This means that while trading volume is increasing, the circulating supply in the market is also continuously shrinking.

Market sentiment remains strong.

Following the price increase, market attention to the project has intensified. Some early holders who bought at lower prices have reaped substantial returns, reinforcing the community's bullish sentiment towards Hyperliquid.

One trader claims that after accumulating positions in HYPE around $20, their paper returns have exceeded 2000%. Such high-yield narratives often continue to attract capital in the short term, but they can also amplify volatility.

Prediction market plans attract attention

The market is also assessing the potential short-term pressure from the increased supply. Crypto user Moon Jeff noted that if more tokens enter the market, HYPE's upward momentum may slow down temporarily.

However, he also mentioned that Hyperliquid is planning to launch a prediction market product. If the product launches successfully and attracts new users, the platform's trading scenarios are expected to expand further, bringing new sources of demand to the ecosystem.

Overall, the market is still focused on Hyperliquid's real revenue generation capabilities, its ongoing buyback program, and the expansion of its trading ecosystem. These factors have collectively supported HYPE's record-breaking surge, but profit-taking by some early holders after the rally could increase short-term volatility.