Hyperliquid posted a short-term rebound on Friday, climbing more than 6% during Asian trading hours before settling near $29.23. The bounce followed news that the decentralized perpetual futures exchange had launched a new advocacy group in Washington, D.C.
The announcement has sparked fresh debate among investors. Can this policy push help HYPE recover from its 2026 losses, or are deeper structural challenges still weighing on price?
Policy Center Launch Sparks Optimism
Hyperliquid revealed the formation of the Hyperliquid Policy Center, a nonprofit focused on advancing regulatory clarity for decentralized finance, particularly on-chain derivatives and perpetual futures.
To support the initiative, the Hyper Foundation committed 1 million HYPE tokens, valued at roughly $29 million. The move positions Hyperliquid as a more active participant in shaping U.S. crypto regulation.
Greater regulatory engagement could enhance visibility and long-term credibility for the protocol. If successful, such efforts may support institutional confidence and broader adoption across the DeFi ecosystem.
However, policy developments tend to influence markets gradually rather than immediately.
On-Chain Data Shows Weakness
Despite the positive headline, on-chain fundamentals present a more cautious picture.
Data from DeFiLlama indicates that total value locked on the network has fallen from $4.7 billion to around $4.2 billion. Meanwhile, weekly revenue generated by DeFi protocols on Hyperliquid has dropped roughly 55% since early February, falling to about $11.83 million.
Declining TVL and revenue often signal reduced network activity and engagement. When utility weakens, investor demand can soften as well.
This fundamental slowdown may limit the sustainability of any short-term rally.
Token Unlock Adds Supply Pressure
Another potential headwind is an upcoming token unlock scheduled for March 6.
Approximately 9.92 million HYPE tokens, valued near $291 million, are set to enter circulation. That represents about 2.72% of the current circulating supply.
Token unlocks can introduce additional selling pressure, particularly if new demand fails to absorb the added liquidity. Markets often price in such events ahead of time, creating volatility around the release date.
Technical Analysis Signals Ongoing Bearish Bias
On the daily chart, HYPE continues to trade below a descending trendline that has acted as dynamic resistance since early February. This suggests sellers remain in control despite recent rebounds.
Momentum indicators reinforce that view. The Aroon Down indicator remains elevated, signaling persistent selling pressure. Meanwhile, the Relative Strength Index has slipped below neutral territory within a falling channel, reflecting weak momentum.
For now, the key support zone sits near $28, which aligns with the 38.2% Fibonacci retracement level. A strong defense at this area could trigger a corrective bounce. However, a breakdown below $28 could expose the next major support near $21.
Can Advocacy Shift the Narrative?
Hyperliquid’s Washington initiative may improve its long-term positioning within the regulatory landscape. But near-term price action still depends heavily on fundamentals, liquidity conditions, and broader crypto market sentiment.
With Bitcoin struggling to maintain key support levels, risk appetite across altcoins remains fragile.
For HYPE to mount a sustained recovery, it will likely need a combination of improved on-chain metrics, successful absorption of the token unlock, and stronger overall market conditions.
For now, investors are weighing whether policy momentum can offset weakening fundamentals in what remains a cautious and technically pressured environment.
