Data & Insights: Hyperliquid’s Rise, Lending Resurgence, and New All-Time Highs

Hyped Up

• Hyperliquid recorded nearly $10 billion in single-day trade volume on Wednesday, December 4th, 2024
  • This was the highest point of the week, at which point the exchange saw trading volumes totaling $40 billion.
  • As of the time of writing, Hyperliquid has a ~51% market share among all perpetual futures protocols in the industry.
• This follows the much-anticipated launch of Hyperliquid’s native token, HYPE, which opened at a fully diluted valuation (FDV) of $3.3 billion on 29 November 2024.
  • In the 10 days since its TGE, the price of HYPE has increased from $3.3 to $13.8, with its FDV peaking at $15 billion on 7 December.
  • This has led to Hyperliquid being the largest perpetual futures DEX in the space by market cap, surpassing the likes of dYdX and GMX.
  • Hyperliquid has entered the top 40 of all protocols in terms of market capitalization.
• Meanwhile, unlike many protocols who often experience a drastic decline in user activity following a token launch, Hyperliquid has exhibited the opposite.
  • This past week’s total volume of $40 billion following the HYPE TGE is 112% higher than the previous week’s total.
  • This demonstrates that trading activity on the platform is and has been driven by genuine adoption as opposed to mostly airdrop speculators as seen in many other pre-TGE protocols.

Gpudgy

• Blur experienced two significant spikes in trading volume this week with $13.5 Million last Sunday, December 1st and then $12.8 Million on Friday, December 6th.
  • This includes the week totaling over $47 Million, up 380% over the week prior.
• Various NFT collections experienced similar increases in trade volume, sales, and floor price this past week.
  • Pudgy Penguins, MAYC, Azuki, CloneX and Cool Cats cumulatively averaged 440% higher trade volumes this past week compared to the week prior.
  • Out of these, Pudgy Penguins stood out as the most notable, with a 309% week-over-week increase in trade volume, going from $7.3 Million to $29.9 Million.
  • The number of sales of Pudgy Penguins also increased from 165 to 450 on the week.
  • Meanwhile, its floor price went up by 15% this week, surpassing BAYC and making it the second-largest NFT collection by market cap, behind CryptoPunks.
• The heightened activity in Pudgy Penguins was likely the result of the announcement of its official and much-anticipated PENGU token.
  • PENGU will have a total supply of 88,888,888,888 and will interestingly launch on Solana, despite being mainly an Ethereum-based NFT.
  • They will also distribute 0.35% of the token supply to FTT token holders, which is even more noteworthy considering how the price of FTT increased by over 60% at its peak on Thursday, 5 December, 2024, a day before the PENGU announcement.

All-Time High ETH Interest, Not So High Price

• Aggregated open interest (OI) of Ethereum futures has hit a new all-time high of $24.4 billion as of Saturday, December 7, 2024.
  • Open interest sits 51% higher than the previous all-time high of $16.1 billion set in June 2024 around the launch of the Ethereum ETFs.
  • This is also 95% higher than the highs in OI set during the peak of the last bull run in November 2021 of $12.5 billion.
  • Interestingly though, despite OI of ETH futures being 95% higher than its November 2021 highs, the actual price of ETH is still 20% lower than that time.
  • Since its peak in December 2021, the ETHBTC ratio, a measure of the price of ETH relative to BTC, has also fallen by over 55%.
• Ethereum’s transition to PoS in this time and the rise of layer-2 solutions have fundamentally altered its economic structure from 2021.
  • Staking incentives have locked up ETH supply, while layer-2 adoption redirects transaction activity off-chain, reducing base-layer demand and price impact.
  • These changes could have created a dynamic where Ethereum's perceived future value drives speculative interest, and thus the increase in OI, even if immediate spot price activity lags.
• Most importantly, it is worth noting that historically, BTC often reaches and trades above its all-time highs first during bull cycles, with ETH typically catching up in the later stages as capital rotates from BTC into ETH.

Crypto Passes $3 Trillion

• The total cryptocurrency market capitalization has reached $3.84 trillion, setting a new all-time high and surpassing its previous peak of $3 trillion in November 2021.
  • This milestone represents a 92% increase from September 2024's $2 trillion market cap, highlighting the market's rapid expansion in Q4 2024.
  • Bitcoin maintains its position as the dominant contributor, accounting for nearly $2 trillion of the total market cap, while Ethereum and XRP follow at $480 billion and $139 billion, respectively.
• Bitcoin's ascent to $100,000 has been a key driver of the market cap growth, coinciding with sustained institutional interest through ETF vehicles.
  • Bitcoin ETFs have recorded positive inflows for six consecutive weeks, suggesting sustained institutional appetite for crypto exposure.
  • Ethereum has also contributed to the surge, breaking above $4,000 alongside Bitcoin while also setting a record daily net inflow of $428.5 million on December 5th. 
• The market's composition reveals the outsized influence of top assets:
  • The three largest cryptocurrencies by market cap - Bitcoin, Ethereum, and XRP - collectively account for approximately 68% of the total market value.
  • This concentration suggests that despite the overall market growth, capital continues to favor more established cryptocurrencies over smaller-cap alternatives.
  • As we’ve discussed in past weeks, Bitcoin's dominance continues to stand strong against other coins, particularly the ETH/BTC ratio, which has continued to decline throughout November.
• Today’s market structure differs notably from the previous 2021 peak, with a significant focus on the increased regulatory advancements and institutional adoption through structure products like ETFs.

DeFi Taking Revenge

• Ethereum's lending landscape has experienced a resurgence in the last few weeks, with total value locked (TVL) in lending protocols reaching new heights. AAVE v3 has led this growth, expanding from $16.5 billion to $27 billion between November 5th and December 5th.
  • AAVE v3, which introduced features like cross-chain functionality and improved capital efficiency over its v2 predecessor, continues to dominate the lending space.
  • Spark v1, another prominent lending protocol, has nearly doubled its TVL from $4.5 billion to $8 billion during the same period.
• The surge in lending activity coincides with broader strength in DeFi tokens, as measured by the GMCI DeFi index, which rose from $73 to $155 in November.
  • The index, which tracks leading DeFi projects, including AAVE as its third-largest component, suggests renewed investor confidence in fundamental DeFi services.
  • This shift marks a departure from the recent market focus on memecoins, potentially indicating a rotation toward utility-driven protocols.
• Political developments may be contributing to the renewed interest in DeFi lending:
  • Anticipation of potential administrative changes in the U.S., including the upcoming departure of SEC Chair Gary Gensler, has sparked optimism around regulatory dynamics.
  • Market participants appear to be positioning for a potentially more crypto-friendly regulatory environment, particularly in the DeFi sector.
• AAVE v3 has captured a significant market share among major lending protocols, strengthening its position as the dominant platform.
  • The simultaneous growth across multiple lending platforms, rather than isolated gains, suggests broader market participation in DeFi lending activities.
  • While memecoin trading volumes have led market narratives in past weeks, December has seen lending protocols claim a larger share of market attention and capital flows.