Hyperliquid's Rapid Rise: Unpacking the Retail FOMO Phenomenon in DeFi

The unpredictable nature of the cryptocurrency market has always posed both opportunities and risks for investors. In November 2025, Hyperliquid (HYPE) became a prime example of how speculative excitement and evolving DeFi structures can intersect. The protocol experienced a dramatic rally, triggered by the postponement of a shareholder vote regarding its $888 million treasury (DAT) merger. This event has reignited discussions about the behavior of retail investors, how liquidity operates, and the dangers of markets driven by fear of missing out.

The Catalyst: A Merger in Limbo

Hyperliquid’s recent price movement is closely linked to the planned merger between Rorschach I LLC (connected to Paradigm Operations) and the publicly traded

BioTherapeutics, Inc. Announced in July 2024, this merger is set to establish Hyperliquid Strategies, a DAT with a focus on acquiring HYPE tokens. As of November 2025, the shareholder vote to approve the merger has been delayed by two weeks due to insufficient participation . David Schamis, speaking for Hyperliquid Strategies, has stated that the necessary majority is expected to be reached by December 2, 2025, are already in favor.

This postponement has created a feedback loop: the uncertainty surrounding the merger has heightened interest from retail traders in HYPE, and the token’s volatile price—fueled by speculation—has increased pressure on the merger’s outcome. This dynamic between governance decisions and market sentiment highlights DeFi’s growing sophistication, where token holders are playing a more active role in shaping protocol developments.

Retail FOMO and the

TNSR

Parallel

Although there is limited direct data on the retail-driven rally in Hyperliquid, trends across DeFi provide useful comparisons. In November 2025, Coinbase’s purchase of Vector.fun—a DEX aggregator on Solana—led to TNSR’s price multiplying eleven times in just two days, only to fall by 37.3% the next day

. This scenario demonstrates the risks of FOMO-fueled retail trading, where late entrants often bear the brunt of profit-taking by early participants. On-chain data showed significant shifts in trading behavior, and strategic buying before public announcements.

While Hyperliquid’s rally does not have the same level of on-chain detail, the overall market environment suggests that retail traders are once again chasing speculative gains over solid fundamentals. Platforms like CoinCodex have reported a surge in searches for “how to buy Hyperliquid,”

noting higher trading activity. This mirrors the TNSR situation, where retail investors, influenced by social media buzz, rushed in to exploit perceived arbitrage, often without a full grasp of the associated risks.

Liquidity Dynamics and the Role of AI

Hyperliquid’s rally also highlights changing liquidity patterns within DeFi. As trading activity intensifies, both protocols and external tools are evolving to better manage volatility. For example,

to help maintain stable yields during significant BTC and ETH price fluctuations. These advancements show a growing awareness that both liquidity providers and retail traders require sophisticated tools to navigate turbulent markets.

Yet, such measures are not infallible. The TNSR incident revealed how quickly liquidity can disappear when speculative interest fades, leaving retail participants vulnerable to tactics like front-running and wash trading. While Hyperliquid’s circumstances are unique, similar questions arise: if the merger is approved, will liquidity providers cash out before the vote? Or will the token’s price find stability as more institutional players get involved?

Risks and Opportunities for Investors

For those looking at Hyperliquid, the main risks stem from its pronounced volatility and the unresolved status of the merger. The postponed shareholder vote introduces a binary risk: a positive outcome could drive prices higher, while a failed vote might lead to a steep decline. Furthermore, the broader DAT sector, which was highly popular in 2024, has slowed in 2025

, as investors become more cautious about projects that may be overhyped.

Nonetheless, there are opportunities for those able to cut through the noise. Hyperliquid’s emphasis on institutional-grade liquidity and its partnership with Paradigm—a major player in crypto—point to long-term promise. Still, as the TNSR example shows, timing and execution are crucial. Retail traders need to weigh their fear of missing out against careful research, examining not only the token’s fundamentals but also the incentives built into its ecosystem.

Conclusion

Hyperliquid’s rally in November 2025 encapsulates the current landscape of DeFi: a mix of institutional strategies, speculative retail activity, and volatility driven by liquidity. While the DAT merger is a notable event, the broader takeaway is the importance of understanding how governance developments and market psychology interact. For investors, the key challenge is to separate true innovation from short-lived hype—a task that requires both technical insight and a healthy skepticism toward FOMO.