Can Grayscale's HYPE ETF generate a short-term price recovery?

Grayscale has just registered a Hyperliquid (HYPE) trust fund in Delaware, a common move before officially filing for an S-1 ETF license. With this step, Grayscale becomes the fourth asset manager to join the HYPE spot ETF race in the United States, following Bitwise, VanEck, and 21shares.

Source: DelawareAccording to market experts, if approved, HYPE will become the youngest altcoin to reach the ETF milestone. Collective demand from institutional investors through ETFs, combined with corporate treasury and continuous token buybacks, is expected to have a positive long-term impact on HYPE.

However, the question remains whether the ETF outlook can sufficiently shift the market sentiment, which is currently gloomy, and improve HYPE’s price momentum in the short term.

Market sentiment towards HYPE remains in “fear” territory

HYPE’s early 2026 recovery saw an 18% increase, reaching $28 on January 6, but almost all of this gain was erased shortly afterward. Despite expectations for an ETF, market sentiment has yet to show signs of improvement.

Source: GateDuring the recent recovery phase, sentiment towards HYPE mainly fluctuated between “fear” and “extreme fear.” Notably, the ongoing token buyback program has created a strong deflationary effect, but it has not been enough to improve overall market sentiment. In the past 24 hours, the project has bought back and burned 80,000 HYPE tokens, three times the amount of tokens rewarded from staking (26,700 HYPE).

According to trader Altcoin Sherpa, negative sentiment towards HYPE stems from monthly token unlocks, whale sell-offs, and increasing competitive pressure from projects like Lighter, Aster, and other perp DEX exchanges.

“Hyperliquid will eventually lead the market again, but I’m not sure when that will happen. I think Lighter will continue to outperform in the short term.”

Can dip buying activity help HYPE reverse its trend?

Nevertheless, the Spot Taker CVD (Cumulative Volume Delta) has turned positive for the first time since May last year, reflecting strong dip-buying activity in the spot market despite weak market sentiment and prices. This could be a positive sign, especially if overall market sentiment also improves.

Source: CryptoQuantCurrently, the price $28 has become an important short-term resistance level, coinciding with the 50-day moving average (white slope). To confirm and sustain the recovery trend, HYPE needs to turn $28 and this moving average into a solid support zone.

Source: TradingViewIf this is not achieved, the lows at $23 and $22 may be tested again in the near future.

Mr. Teacher