Hyperliquid HIP 3 Clocked New Daily Volume on Tuesday at $5.4 Billion

Key Insights:

• Commodity trading volumes on Hyperliquid HIP 3 exploded to record highs on Tuesday.
• HYPE price bounces back by roughly 8%, fueled by HIP 3 demand.
• Unexpected recovery wipes out over $1.3 million worth of HYP short positions.

HyperLiquid HIP 3 is back on the crypto headlines courtesy of its performance. It has been one of the key growth drivers for the network and the primary avenue for capitalizing on the tokenization trend.

According to Artemis data, Hyperliquid HIP 3 perps volumes pushed as high as $5.3 billion on Tuesday. This marked the highest daily trading volume that it has ever achieved so far.

This milestone was noteworthy given that Hyperliquid HIP 3 daily perps volumes struggled to break through $200 million at the start of January.

Moreover, on-chain data revealed that these volumes were not really pushed by crypto trading activities. Instead, the robust volumes were largely driven by commodities trading volumes.

Commodities reportedly led the charge with open interest for this category pushing past $695 million on Tuesday. Unsurprisingly, silver, oil, and gold accounted for the bulk of HIP 3 perp volumes.

Unsurprisingly, this surge in volumes occurred just as the prices of gold, silver, and oil pivoted to the upside. This could signal fresh demand, which likely manifested as leveraged positions.

Hyperliquid HIP 3 Demand Triggers HYPE Price Reversal

The surge in HIP 3 volumes on Tuesday reflected on the HYPE price action. The latter bounced back by roughly 8% on Tuesday, bouncing back from slightly below $37. HYPE price extended its momentum into mid-week, surging to $41.5. It exchanged hands at 40.5 at press time.

HYPE price had previously embarked on a retracement after venturing into overbought territory. The bounceback signaled that the cryptocurrency’s price movements were heavily tied to Hyperliquid HIP 3 volumes.

Consequently, the HYPE crypto’s latest momentum depended on whether Hyperliquid HIP 3 could sustain it. It is worth noting that the latest volumes have so far shielded the cryptocurrency from more downside.

However, the volumes were largely leveraged positions, and this may underscore a limit to the impact on price.

Bullish Reversal Triggers Short Liquidation Exposure

It’s worth noting that the HYPE price retreat triggered a surge in short positions. Moreover, recent on-chain data showed a surge in appetite for leverage, as evidenced by rising open interest.

For context, Hyperliquid crypto open interest surged from as low as $1.1 billion to $1.83 billion at its highest, and $1.70 at press time. Notably elevated open interest suggests significant derivatives activity.

According to CryptoQuant, roughly $1.15 million short positions were liquidated on 24 March. In contrast, only about $331,000 HYPE long positions were liquidated during the same period.

This was a noteworthy shift from just a few days prior, when HYPE crypto shorts were much lower than longs. This shift revealed a significant shift in market dynamics from favoring short positions to favoring long positions.

In summary, the pivot led to an ideal bear trap scenario. However, whether this outcome would continue to favor the bulls remained uncertain. This is because the subsequent demand remained relatively subdued.

Meanwhile, organic demand has historically offered a limited run, which means the HYPE price might require broader catalysts beyond organic factors to achieve more recovery. Interestingly, one major development may offer just that. Recent filings revealed that Grayscale may soon unveil a Hyperliquid spot ETF.