Hyperliquid (HYPE) price went parabolic on Tuesday, driven by a surge in commodities trading volume on the platform.

According to data from crypto.news, Hyperliquid (HYPE) shot up 23% to nearly a three-week high of $27 on Tuesday afternoon Asian time. At this price, it remains 31% above its lowest point this week.

The major catalyst driving the HYPE price can be attributed to a rapid adoption of HIP-3, a major proposal that went live in mid-October last year. It allows anyone to launch perpetual futures contracts for a wide range of assets beyond typical cryptocurrencies, including commodities (gold and silver), US stocks, and indices, provided they have 500K HYPE staked on the network to deploy the contract.

In a Jan. 26 X post, the Hyperliquid team noted that open interest on the platforms running the upgrade had hit an all-time high of $790 million on Monday, a significant feat compared to the $260 million recorded just a month ago.

Commodities trading volume has surged on Hyperliquid as gold and silver take center stage, drawing in traders looking for a decentralized hedge against the current ‘risk-off’ global climate.

Even with a lackluster backdrop for major cryptocurrencies, Hyperliquid’s commodity offerings have created a distinct growth pocket, effectively insulated from the wider market malaise.

According to recent reports, the Silver (SILVER-USDC) contract has become one of the most active markets on the platform, ranking just behind Bitcoin (BTC) and Ether (ETH) in trading volume, with cumulative volumes nearing $1 billion.

Surges in Hyperliquid trading volume, particularly within HIP-3 markets like Silver, create a direct deflationary tailwind for the HYPE token via the protocol’s automated buyback and burn mechanism.

The platform funnels 97% of all trading fees (from both the original and new HIP-3 markets) into an Assistance Fund that automatically buys HYPE tokens on the open market. The network has repurchased tokens worth over $44 million in the last 30 days.

Furthermore, if these fees are paid in HYPE tokens, they are automatically burned, permanently reducing the supply. 

On top of this, as more perpetual contracts launch on the platform, more HYPE tokens are staked to meet the staking cap, which further reduces the total circulating supply.

Against this backdrop, whales have also started to accumulate HYPE. Data from analytics platform Onchain Lens shows that over $10 million in HYPE had exited exchanges over the past 24 hours, specifically via Galaxy Digital OTC transfers.

Hyperliquid price analysis

Hyperliquid price has broken out of a multi-month falling wedge pattern on the daily chart. A confirmed falling wedge pattern occurs when the price breaks from the upper trendline of the formation and is one of the most common bullish reversal signals in technical analysis.

The MACD indicator had completed a bullish crossover, which is considered a common trend reversal signal. Simultaneously, the RSI has bounced off neutral levels to 60, which confirms renewed buyer interest while suggesting the rally has room for growth before hitting overbought territory.

Hence, HYPE price would likely continue to see sustained upside toward the $40 target. This level is calculated by projecting the height of the preceding pattern onto the breakout point. Notably, this target sits approximately 48% above current prices and converges with a major psychological resistance level.

On the contrary, a drop below last week’s low of $20 seen would invalidate the bullish forecast.