4.33 million HYPE tokens are about to be unlocked: market struggle under supply shocks

Based on on-chain monitoring data, Hyperliquid will experience a concentrated unlock of 4.33 million HYPE tokens within the next 24 hours, estimated at approximately $246 million at current market prices, accounting for about 1.95% of the current circulating supply. This unlock scale has set a recent record for the largest single-day token supply release of HYPE. Following closely, on June 2nd, another 2.07 million HYPE tokens will be unlocked, valued at around $117 million, creating two consecutive large-scale supply shocks.

As of May 28, 2026, based on Gate market data, HYPE is temporarily priced at $56.6, down 9.7% over the past 24 hours. After reaching a historical high of $64.8 earlier this week, the token has been oscillating downward for four consecutive trading days.

How to Quantify and Assess the Supply Pressure from Large-Scale Unlocks

The value of the token unlock is approximately $246 million, which means that within the next 24 hours, a potential selling pressure equivalent to multiple times the token’s current average daily trading volume could enter the market. However, unlocks and selling are not the same thing. The distribution targets and holding intentions of the 4.33 million tokens are core variables in assessing market impact.

From a microstructure perspective, the impact of token unlocks often begins to manifest before the event occurs. Market data shows that major unlock events are usually priced into the market about 30 days prior, as traders adjust their positions in anticipation, causing prices to react in advance. The four-day correction after reaching a new high can partly be interpreted as the market pre-absorbing the upcoming supply increase.

Meanwhile, the concentration of the unlock also warrants quantification. The 4.33 million tokens represent about 1.95% of the current circulating supply, meaning that after the unlock, the total tradable tokens in the market will increase by nearly 2%. If most of this incremental supply flows into the open order book without sufficient demand hedging, prices could face structural downward pressure.

Can Buybacks and Staking Provide Effective Hedging Against Selling Pressure?

The built-in supply-demand management mechanism of the Hyperliquid protocol is a key channel for absorbing this event. The protocol’s buyback mechanism continuously directs about 99% of DEX trading fees toward repurchasing HYPE on the open market, creating a sustained passive buy-in. As of May 2026, the rescue fund has invested over $1.3 billion in HYPE buybacks, holding about 28.5 million tokens at the high price point.

The staking system also plays an important role in absorbing the unlock. On May 6th, earlier this month, Hyperliquid released 9.92 million HYPE to core contributors, far exceeding this event’s 4.33 million. Yet, the market did not experience a catastrophic collapse. On that day, about $15.2 million worth of HYPE was transferred from trading platforms into staking, with some core contributors choosing to keep their tokens staked rather than immediately liquidate on secondary markets.

However, attention should be paid to changes in structural support. The protocol’s buyback scale has decreased from $316.7 million in Q3 2025 to $192.2 million in Q1 2026, a contraction of about 40%. The shrinking buyback volume, combined with the increasing circulating supply, creates a compounded absorption pressure.

Market Focus: How Do Whale Behaviors Affect Short-Term Price Discovery?

A key wallet in this event is the trader “Loracle.” This address will unlock 893k HYPE tokens in the coming hours, worth about $50.8 million, marking its largest single unlock to date. Loracle currently stakes approximately 9.92M HYPE, valued at around $120 million.

The on-chain transaction history of this whale provides observable behavioral references. Over the past month, Loracle has unlocked twice, totaling 893k HYPE, worth about $63.5 million. On May 21st, when HYPE first hit a new all-time high, this address sold 557k HYPE, valued at about $33.35 million. This timing of selling near the high suggests a tendency for the whale to realize gains around peak prices, and its potential short-term liquidity impact should not be underestimated.

Market concern over Loracle is not only due to its spot selling history but also relates to its complex futures exposure. Currently, this whale holds a short position of about $104 million in HYPE futures, with a liquidation price around $90. If the 893k spot tokens are sold without a corresponding hedge in the short position, its futures exposure would turn into a naked short, risking a short squeeze that could lead to losses exceeding $100 million—enough to wipe out all its spot gains. This complex long-short dynamic makes Loracle’s unlock behavior not only a potential selling pressure but also a factor in rebalancing the entire HYPE futures market positions.

Can Institutional Funds Absorb the Supply Increase from Unlocks?

Concurrent with this unlock, there has been strong capital inflow into HYPE spot ETFs. Since mid-May, when Bitwise and 21Shares launched HYPE spot ETFs on US exchanges, these products have accumulated over $100 million in net inflows within just 10 trading days, representing about 1.04% of the total token market cap—faster than Bitcoin ETF launch inflow rates by 1.75 times.

From a demand structure perspective, institutional buying exhibits different timing and decision-making logic. ETF inflows tend to be steady and accumulative rather than impulsive, meaning they may not provide immediate price support during the unlock window but can serve as a stable demand anchor over longer periods.

Additionally, Grayscale has submitted a third revised application to advance its HYPE spot ETF registration. If approved, this would further broaden compliant capital access channels. The diversification of institutional demand channels extends HYPE’s demand base from solely on-chain traders to a wider range of traditional financial market participants.

On-Chain Observable Indicators During the Unlock Window

This event’s transparency is characterized by high on-chain observability. Many monitoring tools can track the progress of major wallets’ unlocks and subsequent token flows in real time, allowing market participants to obtain actual supply distribution information within minutes of the event.

From an on-chain behavior perspective, the key focus is on the flow paths of tokens post-unlock. If the unlocked tokens quickly move into exchange hot wallets, it indicates a clear intention to realize gains, amplifying short-term selling pressure. Conversely, if tokens flow into staking contracts or newly created cold wallets, it suggests long-term holding intentions, with limited immediate impact on the open market.

Historical experience shows that after the May 6th unlock of 9.92 million HYPE, the market remained stable, demonstrating that real-time on-chain data can itself be a variable influencing market stability—reducing information asymmetry helps mitigate panic selling.

Mid- to Long-Term Perspective: How Unlocks Reshape Token Valuation Logic

Token unlocks are not just one-time supply events; they continuously influence market valuation logic over longer cycles. Under the current monthly unlock rhythm, core contributors release about 992,000 HYPE on the 6th of each month, combined with the 433,000 and 207,000 tokens scheduled for June 2nd, forming a predictable supply rhythm.

From a valuation standpoint, HYPE’s pricing framework is evolving from a single narrative to a more complex model. Protocol revenue, buyback scale, staking participation, ETF capital inflows, and unlock pressures collectively shape the current market’s valuation reference system. Notably, Hyperliquid’s total protocol revenue reached $214.95 million in Q1 2026, with over $104 million in Q2 alone. The conversion efficiency between this cash flow and token buybacks is increasingly central to market pricing.

The role of the unlock mechanism in valuation is twofold. On one hand, predictable supply increases provide structured trading opportunities for short-term traders. On the other hand, when the unlocked tokens are effectively absorbed rather than sold off, it can reinforce market confidence in long-term holding. This dynamic will continue to play out in each subsequent unlock cycle.

Summary

The large-scale unlock of 4.33 million HYPE tokens is a structural stress test for the Hyperliquid ecosystem. The potential selling pressure exceeding $246 million, the consecutive corrections after reaching new highs, and the complex long-short positions of whale Loracle form the core variables of this event. The protocol’s built-in buyback and staking mechanisms offer normalized supply absorption channels, but the structural decline in buyback scale warrants ongoing attention.

Meanwhile, over $2.01M in capital inflows into HYPE spot ETFs are creating new institutional demand anchors, whose absorption effects will gradually manifest during price convergence after the unlock. The event itself is not inherently bearish; its market impact depends on the actual distribution of supply, the strength of institutional absorption, and the behavioral signals revealed by on-chain data. For market participants, the most critical focus during the unlock window is not the price itself but the flow paths of tokens, signals from major holders, and the real-time strength of protocol buybacks—these on-chain observable data will directly influence HYPE’s market structure after this supply stress test.

FAQ

Q: What proportion of the total supply does the 4.33 million HYPE unlock represent?

4.33 million HYPE accounts for about 1.95% of the current circulating supply. Based on a maximum supply of 1 billion tokens, it’s roughly 0.43%. It’s important to note that the more relevant metric for market impact is the proportion of circulating supply, since only tokens that are immediately tradable contribute to potential selling pressure.

Q: Why is Loracle’s unlock behavior widely watched?

This whale’s combined holdings of spot HYPE and short futures positions make its unlock a potential trigger for chain reactions. Given its current position, if the spot tokens are sold without a corresponding hedge in the short position, the $104 million futures exposure could turn into naked shorts, risking a short squeeze with potential losses exceeding $100 million—enough to wipe out all its spot gains.

Q: Does this unlock necessarily mean HYPE’s price will fall?

Not necessarily. The event itself does not imply selling; the key variable is the flow of tokens. Historical cases, such as the May 6th unlock of 9.92 million HYPE, showed market stability, partly due to protocol buybacks and holder staking. However, the complex strategies of whales and the potential for asymmetric behaviors add short-term uncertainty, and the actual market impact will depend on token distribution paths and institutional absorption.

Q: How much can the protocol’s buyback mechanism offset the impact of this unlock?

The rescue fund conducts daily open-market buybacks funded by protocol trading fees. This provides ongoing buying support, helping to smooth price fluctuations caused by supply shocks. However, buyback scale has decreased by about 40% from its peak, and its capacity is not unlimited, influenced by trading volume cycles.

Q: What is the value of on-chain data in this event?

The transparency of on-chain data is a key feature distinguishing this event from traditional supply releases. By tracking the flow of tokens post-unlock—whether into exchanges, staking contracts, or cold wallets—market participants can obtain real-time supply distribution information. This reduces information asymmetry and can help mitigate panic selling by providing clearer insights into holder intentions.