Hyperliquid Assistance Fund Expands Its Stake in $HYPE, Raising Questions About Future Strategy

The Hyperliquid Assistance Fund (AF) has made a significant move in the cryptocurrency market by acquiring an additional $14 million worth of $HYPE tokens, increasing its holdings to almost 4.9% of the circulating supply.

This action marks another strategic step in the AF’s ongoing effort to build a significant position in the $HYPE token. With the AF accumulating $HYPE at an increasingly rapid pace, several intriguing questions have arisen concerning the fund’s potential next steps once its target holdings are reached. This situation is unfolding at a critically important time for $HYPE.

What Happens When the AF Reaches Its Limit?

The central query in the crypto community is this: What occurs when the Hyperliquid Assistance Fund has gathered a sufficient amount of $HYPE tokens? As the fund continues to buy up tokens, it increasingly appears they will one day stop the madness and cease their buying spree.

When they do, some here speculate the price of $HYPE will have reached a fair market value and won’t be propped up any further by the fund. Others here think either or both of those scenarios could play out.

When the AF stops its buying action, a number of plausible results can ensue. One is that the AF turns its attention to the accumulation of other assets, like Bitcoin (BTC) or USDC, that it could stabilize over the long term and use in markets during times of stress. This would not only allow the fund to diversify its portfolios, potentially balancing them in a more volatility-insulated way, but it could also be interpreted as a kind of cryptocurrency insurance: if the AF can use BTC as a stable asset over the long term, then it has a Bitcoin hedge.

Alternatively, the AF could pivot to a strategy of dividends. Based on the current monthly revenue per $HYPE, it’s estimated that the yield could be around $1.90 per token, which equates to approximately a 12% return on investment. With this level of yield, the AF could decide to distribute earnings to its stakeholders or reinvest into other opportunities. The decision to move toward dividends could be an attractive option if the AF believes that $HYPE’s growth potential has plateaued, but the token still offers stable returns for long-term holders.

Another possibility is that the AF could simply hold its current $HYPE, effectively removing a large portion of the circulating supply from the market. By doing so, the fund would reduce the token’s float over time, potentially increasing scarcity and driving up its value. This strategy would make sense if the AF believes that $HYPE is undervalued and wants to capitalize on the long-term potential of its holdings.

Whale Purchases $HYPE with $15.7 Million USDC

In the meantime, another whale investor has taken a substantial interest in the $HYPE market. A major market player dropped a hefty $15.7 million in USDC to amass 563,238 $HYPE tokens just over the last two days. This gigantic buyer made its presence known through a series of multiple transactions, placing limit orders that ranged from $12 to $14.63 per token. The actual value of the transactions that have occurred thus far sits at just shy of $9 million, with the buyer still having around $6.49 million in USDC on the side, reserved specifically for more $HYPE token purchases.

This whale buying activity indicates a strong belief in $HYPE’s future value, particularly at recent price levels. As an individual buyer of significant size in the market, this whale’s actions suggest an emerging confidence in the asset. Additionally, the whale’s placing of multiple limit orders in the $12 to $14.63 range signals a targeted attempt to accumulate as much $HYPE as possible at a specific price point.

This large-scale buying activity, combined with the continued acquisition efforts of the Hyperliquid Assistance Fund, has put significant pressure on the supply and demand dynamics of the $HYPE market. If these whales keep up their accumulation strategies, they’re likely to push the price higher, especially if the supply starts to tighten due to the removing of tokens from circulation.

A Balancing Act Between Accumulation and Market Fundamentals

Currently, the Hyperliquid Assistance Fund’s strategy seems to be centered on repurchase strategies, as $HYPE is still very much perceived as undervalued. What the AF buying suggests (and at this point, the purchases in question have all been disclosed) is that the AF believes the token’s price is not an accurate reflection of the long-term prospect and pay-off that the token offers, and that they are willing to accumulate more at this perceived discount.

Should the price of $HYPE appreciate to levels that the AF judges to no longer be fairly valued on the basis of the asset’s fundamentals, the fund might well stop its purchase program and take one of two paths: either it might start accumulating reserves in $HYPE (which we think is a possibility given that the AF and the whale are both large holders of $HYPE and thus would prefer to have the asset maintain its price); or it might start paying out dividends in $HYPE (which is a pretty sensible way to diversify your $HYPE holdings if you are the AF, a crypto whale, or a close-to-$HYPE-large-cap private investor). In any case, the path that $HYPE takes seems inextricably tied to the path that these big holders take.

Conclusion

The $HYPE market has become more complex due to the aggressive acquisition of $HYPE tokens by the Hyperliquid Assistance Fund, which now holds almost 5% of the circulating supply, and the not-so-simple buying and selling by a major whale investor. With the next step for AF (i.e., reserves, dividends, or voltage suppression) undetermined, the next step for whales equally up in the air, the $HYPE price slope looking primed to moisten some underbelly soon, and the mood of the crypto bros as bullish as ever, it’s a good time to look at the forces shaping the $HYPE market.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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