Grayscale Enters the Spot HYPE ETF Race: A New Era for Altcoin HYPE

Grayscale has officially registered a Hyperliquid (HYPE)-linked statutory trust in Delaware, marking a strategic move prior to filing for an official S-1 ETF application. This places Grayscale among prominent asset managers like Bitwise, VanEck, and 21Shares, in the rapidly evolving U.S. Spot HYPE ETF competition. If approved, this would make HYPE the youngest altcoin to reach ETF status, a significant milestone in the cryptocurrency landscape.

The appetite for cryptocurrency among institutional investors has been on the rise, with a collective demand for ETFs driven by corporate treasuries and ongoing buybacks. This burgeoning interest in HYPE could have positive implications for its long-term value. However, concerns remain regarding whether these ETF expectations can counterbalance the prevailing weak market sentiment and HYPE’s price fluctuations in the short run.

As 2026 begins, HYPE’s market recovery made a brief stint of 18%, climbing to $28 by January 6, only to see those gains largely erased shortly thereafter. Throughout this period, market sentiment hovered between “fear” and “extreme fear,” indicating investor skepticism despite the looming ETF approvals. This sentiment has been notably resilient, failing to recover despite the positive prospects associated with ETF applications.

Interestingly, HYPE’s recent buyback efforts have resulted in a net deflationary impact. In the last 24 hours, 80,000 HYPE tokens were bought back and burned, significantly outpacing staking rewards of 26,700 HYPE. Yet the overarching market sentiment remains sour due to several factors: monthly unlocks, whale sell-offs, and increasing competition from platforms like Lighter and Aster. Notably, trader Altcoin Sherpa pointed out that while HYPE is poised for a comeback, Lighter is likely to outperform it in the short term.

Despite the prevailing negative sentiment, there are signs of active dip-buying in the market. The Spot Taker Cumulative Volume Delta (CVD) has turned positive for the first time since May, indicating a shift toward bullish activity. Should this trend continue, and if the overall market sentiment improves, HYPE could see a significant recovery in the near future. For this to happen, HYPE must overcome the critical $28 price point, which also aligns with a key 50-day moving average. If this barrier is transformed into support, HYPE could regain momentum; otherwise, it risks revisiting lows near $23 and $22.

In conclusion, Grayscale’s foray into the U.S. Spot HYPE ETF race positions it alongside established names in the industry. While there are promising prospects in terms of institutional interest, current market sentiment is hampered by several adverse factors. Moving forward, developments in the broader market and HYPE’s performance at crucial price levels will be pivotal in determining its short-term trajectory and long-term viability.