Transcription
Because Hyperlquid has just hit a new all-time high. Uh, a lot of people are wondering, hey, does this mean that it's either the start of a new alt season or if Hyperliquid is something super special that they can just buy and hold even though we are in a general crypto bear market.
So, uh, neither of those cases are true. Okay, we are not in a macro altcoin season. We're not even in a uh altcoin bull market and Hyperliquid is getting pretty expensive both in terms of TA price analysis. It's just hit a new all-time high as overbought as it can ever be. And in terms of uh valuation metrics, P/S ratio, it's getting pretty expensive. Is the technology fundamentally very strong? The most one of the most useful um technologies in all of crypto. Yes, it is. But does it justify buying in a bear market at an all-time high? No.
So, today I will give you all the reasons and all of the fair analysis to tell you what I think about Hyperliquid and whether it is still a good buy or not. Currently at $60 and if it's not a good buy, what's the buy target? Okay. Uh, let's get right into this.
So, I want to start us off with a um brief overview of what Hyperliquid is. So, in short, Hyperliquid started off as a perpetual decentralized exchange where anyone can trade uh futures on crypto. Okay. So, Bitcoin, Ethereum, Solana, most of the uh major cryptos can be traded on here. Now, this was uh 2022. Since uh they launched their token, they've gained a huge amount of traction because their token did really well in the bull market. Uh but we are past that stage now. It's no longer just a perps token that did a big airdrop and everyone's trying to farm it and and get a new airdrop. Okay, we're past that.
Today, it is one of the largest exchanges, period. Not just on-chain perpetuals, it is actually the uh fifth largest futures exchange by uh open interest, not even by volume. So, when you track open interest, this is the amount of positions that are left open. It's not washable. You cannot open a position and close a position to get wash trading volume. Open interest is a real statistic. So, Hyperliquid is the fifth largest exchange in crypto today. Uh it's behind Binance, Mexi, Bybit, Gate. Uh that's it. Okay. There are more, you know, spot volume on other exchanges. I'm sure like OKX for example has a big uh there's a lot of good exchanges out there but in terms of per okay futures volume Hyperliquid is number five. Very big, very big achievement and it's not a big gap either between this and the top four. You see Hyperliquid 9.6 billion open interest, Bybit is 11.8 billion open interest. So it is big. Someone says not a big deal but dog squeak toy going crazy. Yeah, the the dog is uh dog is getting some background music here. You got to got to just deal with it. Cannot stop the puppy.
So uh while Hyperliquid is one of the biggest exchanges overall, the valuation is also getting pretty expensive. Even if you just look at it face level, it's 15 billion circulating market cap, 57 billion fully diluted valuation and uh they have constant token unlock pressure coming to the market. So the vesting schedule started to vest in November of last year and every month there's a decent chunk of new hype being unlocked. So from this cycle until the end of next cycle which is late 2027, 2028 maybe, Hyperliquid will have a big increase in circulating supply which leads to sell pressure of course. Uh so is that going to kill the project? No. The project is very legit.
So let's talk about the good thing. Okay. Not only is the volume very good in crypto, Hyperliquid is very unique because it is the only perps exchange that has transcended crypto. So today some of the most popular markets on Hyperliquid are not crypto markets, they are TradFi markets. So these are things like uh trading of indices. So you see on here, I'm going to zoom in, XYZ 100. This is the NASDAQ as a 30x per uh tradable on Hyperliquid. And this is not launched by Hyperliquid, it's launched by one of their integration uh partners, trade.xyz. So that's the other interesting part. It's a decentralized market. And you have the uh S&P 500, you have USA 500, US 500. You have a bunch of these. And you see these little tags here, XYZ, KM, Cash, FX. These are all different partners that launched these perpetual markets to trade on Hyperliquid using their liquidity layer, but in a decentralized way. They are not launched by Hyperliquid themselves. There is no uh gatekeeping. As long as you have good liquidity, you can support those markets. You get voted in. You can list perps markets on here, which is super interesting because uh centralized exchanges, TradFi exchanges can never do this. Okay? You cannot just go to Binance and say, "Hey, look, I'm going to list a coin on your exchange and I do it. You don't list it." No. No centralized exchange offers that. And in TradFi, obviously not. You cannot just go to the NASDAQ and say, "Hey, look, license part of your exchange to me and I govern that." No, you can't do that. This is only doable on Hyperliquid.
And uh it's not the first time that this has been attempted to to create a decentralized perps listing market in crypto. dYdX has this since uh three years ago. However, dYdX just has no distribution. So, Hyperliquid is at a unique spot where they can do this in a very crypto-native way uh that anyone can do as long as you have a very liquid market. There's enough interest and you have the capital to back it up and they have distribution because when you list these markets, look, the NASDAQ trading on Hyperliquid has $400 million of open interest. There are $400 million of long and short positions open right now. trading the NASDAQ on Hyperliquid. So that's real. Okay. So, uh that's the unique advantage here.
Now, you'll say, hey, look, uh that's cool, but um, you know, like why don't I just use Binance or why don't I just use Robinhood? Uh, for a user perspective, I'll offer you what I see as actually unique. So this, so far we've talked about the adoption. The adoption is real. Uh the numbers are here. Now why did the adoption happen? Uh two reasons. The first reason is actually very uh it's it's a little bit controversial, but Hyperliquid has no KYC. So, no matter where you are at, in order to trade on Hyperliquid, all you need is a crypto wallet and a VPN. That is pretty crazy. So, I can I mean, obviously they're blocking this. I'm not saying like go do this, but if I were like like uh, you know, from Russia and I get sanctioned everywhere, but I'm a totally legit citizen and I'm a, you know, multi-millionaire in Russia, how do I trade the S&P 500? I can't. I cannot do it. But I can do it with Hyperliquid with a simple VPN and some USDC in my wallet and uh Ethereum or Solana wallet. I trade S&P 500. So um that's the first reason why there's so much adoption. It's because it's truly no KYC. I don't know how long they can keep this up, but uh very interesting to say the least that they that it is still no KYC.
Uh second main reason is more interesting. It's actually a fundamental thing and that is this right here. So HIP3 builder deployed perpetuals. Uh if you remember when I just covered this, um how these different markets have a little badge behind them, XYZ, KM, Cash, etc. These are all integration partners. So XYZ is this one, trade.xyz. This is a um like liquidity provider. You can say a platform that sits on top of Hyperliquid. A company that sits on top of Hyperliquid to specifically target TradFi assets to trade on Hyperliquid and you have uh some others such as the other main interesting one is Ventrols, VNTL, and that is where is Ventrol here. This is also allowing you to trade perpetuals on Hyperliquid. Okay.
Now, why is Hyperliquid's HIP3 so interesting? They've figured out how to trade non-liquid assets, very liquid, using perpetuals. How does this work? So, what are the most popular assets that people want to trade this year? It's AI. And among those, what are the most illiquid but most high demand? It's the pre-IPO stuff. So things like uh Anthropic, OpenAI, SpaceX. Okay. Now there are these markets on Hyperliquid that uh for example for SpaceX, there is a valuation-based pre-IPO market. So this is launched by Ventrols and one contract of this worth $2,200 is represents $1 billion of valuation in SpaceX. So currently you can long or short to SpaceX at a $2.2 trillion valuation uh using Hyperliquid. Now, a big problem with this is it doesn't give you real exposure to the shares after uh the market launches, after SpaceX IPOs. Okay? Because it's strictly pre-IPO. Number one. Number two, because of that, the market is not liquid. You see all these big big chops here. It is crazy. This is unacceptable for any market. Uh so this is very similar to how a traditional pre-IPO market trades. If you're familiar with Hive uh or Forge, okay, or NASDAQ pre-market or even like Polymarket prediction market, it will trade something like this where it's very choppy because it's not liquid. It doesn't represent um a liquid market right away right after the IPO.
However, with HIP3, Hyperliquid figured this out. So, there is a new uh there are two new markets that prove this. So, the first one is this one, the CBRS USDC market, this one. So, this is a uh this is launched by Trade XYZ, not Ventrols. So how this works is it's a pre-market uh perpetuals, very similar to the pre-market perpetuals in crypto where you have a TGE but then the pre-market of that trades few weeks to a month before that and then right after the asset launches and lists on uh the NASDAQ in this case for Cerebras, this is a major AI company, the perpetual, the pre-market transitions to a real market right away on that second. And they tested this with the Cerebras IPO. So the Cerebras IPO, you can check this out. You can look at it. Uh it's this company right here. Their stock is uh very big. Okay, Cerebras' IPO is at uh May 14th and their valuation was 95 billion. on its first day of trading. This is a huge IPO. Uh and it's an AI company, very, very high volume. So, on the day of the IPO, the offer price was $185 per share. The opening price was 350. First day closed at 311. Look at the market on here. Pre-market on Hyperliquid started trading two weeks before that, May 1st going into May 14th. You see this was decently liquid and then on the day off this market also spiked and then came back down, very similar to IPO. But the key here is it's continuous. It trades from pre-market to post-market and now a real perps market in the same chart, same market. So what this means is if you apply this to any pre-IPO asset that has high volume, you can get very good liquidity, no slip, uh very low slippage depending on how liquid it is and your position will transition into a perps of that company after IPOs. This is very hard to do. Uh I don't even know if you can do this very easily using like Hive, Forge, maybe NASDAQ pre-market because it's the NASDAQ, but I haven't done it on those platforms yet. So, you can imagine it like this, like you want to buy SpaceX IPO stock pre-IPO today, and then you wanted to lend in your brokerage account the second that SpaceX IPOs on the NASDAQ next month. It's very difficult to do that unless you have um access to the IPO itself on the NASDAQ which is very difficult. So this here, Hyperliquid, they proved this with the Cerebras IPO and now they have this again in uh SpaceX. So you look at HIP3 TradFi pre-IPO, you see this one here, SpaceX USDC. This one is different from the SpaceX USDH1 because this one is purely speculating on the valuation. There is no resolution. Once this uh once SpaceX IPOs, this will close. Whereas with the uh this new one, SPCX USDC, this is a market that maps to the share of SpaceX itself. Okay, so per share of SpaceX and whatever the share price of SpaceX right at the NASDAQ listing, it will get fed into it from an oracle, like oracle price up here, and it will start to get resolved as the uh index price on this market right after the perps listing. That's very unique. Okay.
So, as far as I know, nowhere has this. No place has this. And um that's why I think Hyperliquid is so interesting. You can't do this on Robinhood. Well, you can if you have some allocation to the IPO, but usually it's a um raffle and uh you can't size in. You can't even invest like $10,000 on here. This is very liquid. $43 million of open interest. So you can easily size like 100k, 500k in here, no problem. And you know that it will resolve to the real price of SpaceX uh after IPOs next month. So out of everything that has come out from uh I from Hyperliquid over the past six months, they have done a lot of things. I think HIP3 is the biggest update and specifically for pre-IPOs. It's the one thing that they really hit right that nowhere else has this. Okay. Um once we have these IPOs, I would not be surprised if they get a huge influx of traders because like it's already difficult enough to trade these US companies if you are not from the US and especially if you are from a kind of weird part of the world. But not only that, in order to access the IPOs, it is super difficult. With this, there's no barrier to entry. You need a VPN, you need a crypto wallet. That's it. And then you can invest in SpaceX real uh market-priced shares based on oracle price that will resolve right after the listing of the IPO. Very impressive. Okay.
So, um aside from everything else, okay, that Hyperliquid already is, this is the main thing that is sexy right now. Uh and you can think of this uh as like the place, the one place to trade all pre-IPOs, but they also want to do this for a lot of other things. They have markets for commodities, basically all types of commodities. They have forex, they have indices like we said, not only US indices but also Korea indices, Japan, uh small caps, by sectors, right? Robotics, biotech, defense, semis, uh energy, you can trade everything on here. They even have prediction markets, although I think this is kind of hit or miss. So far, they have no volume. Uh they did a whole uh proposal, HIP4, to create prediction market trading on Hyperliquid, but I'm not too hyped up about this because prediction markets don't have that much volume when you trade it on an order book like this. Uh I think the most the coolest one is pre-IPOs.
Now let's talk about uh valuations. So Hyperliquid is super cool. The fact that it allows you to trade anything on-chain, truly accessible from uh anywhere in the world by anyone. Uh the valuation is expensive. So here are some charts I want to show you. So annualized revenue, Hyperliquid is at 740 million per year and this is higher, way higher than Uniswap, way higher, higher than every single other decentralized exchange. Uh it is about 16, about 16-17% of Robinhood's uh annualized revenue and about uh 11% of the revenue of the CME. Okay. So it's not up there yet, but it's meaningful. It's comparable. Okay. So, but we're not trying to overtake the CME by a not by a long shot. What Hyperliquid tries to offer is just another way to trade. So, really the thing I was looking at is the P/S ratio, price to sales ratio. Uh so when you compare the price to sales ratio, which is the most common way to value an exchange, Hyperliquid by FTV uh metrics. Okay, price to sales ratio is pretty expensive. Okay. So here it is uh by circulating P/S ratio, Hyperliquid is at 20. If you compare this to Uniswap, it's cheaper than Uniswap. But compared to every other uh perps exchange, for example, Lighter is at 8.9. So Lighter is uh cheaper by 2x multiple than Hyperliquid. dYdX, even though nobody uses it today. Okay. Uh it's 41. So actually dYdX is kind of bad, bad comparison there. Uh when you compare Hyperliquid with Robinhood, CME, Coinbase in terms of circulating market cap, okay, not even fully diluted valuation. Robinhood comes in at 15x P/S ratio. CME is at 12x and Coinbase is at 7.5x. So even circulating market cap, Hyperliquid is pretty expensive compared to an exchange valuation and especially when you consider that this valuation, the circulating market cap is going to get much closer to the fully diluted market cap over the next couple years because we have constant uh vesting happening right now that started in Q4 of last year. So the smarter thing to do here is to look at the FTV and the FTV metrics is 77x P/S ratio, which is pretty expensive. So look at the fully diluted valuation uh P/S ratio for Lighter is 35, dYdX 47. So actually dYdX is cheaper because there's no um dilution. Uniswap 65. So even Uniswap is cheaper than Hyperliquid if you account for the uh inflation, not inflation, the unlocks of tokens. Okay, Hyperliquid. Wow, this is actually even higher. Uh you I'm not even trying to nitpick here. You can look at all projects on here and just try to compare with any um perps. Let's look at a couple more. Aster. Here you go. I didn't even look at these beforehand. Let's see. Metrics, uh token turnover, all metrics, financial. They don't even want to look at it, Aster, because they don't share any fees. Uh let's look at GMX. Okay. Metrics, valuation, P/S ratio, FTV. Well, yeah. You see the inflation, uh the the token unlock really has heavy pressure on Hype. Even though its value, its fees is the highest, way higher than everybody else. It's unlock is also super aggressive over the next next cycle. Uh you can do the comparison yourself here.
So, does this mean you should never buy Hyperliquid? No, of course not. Okay, Hyperliquid is the best perps exchange by far by all metrics, but there will be a time and there will be a a a target. Okay, so let's do some TA on this. The way I look at Hyperliquid is this. Based on time, Hyperliquid is very similar to where Solana was in uh late 2023. So, Solana just had its first cycle in 2021, okay? Had its big drawdown and then comes back up to retest the all-time high. But you see it failed to break above. And this was even uh in the second bull market already. 2024 was the bull market. Hyperliquid, you see very similar uh initial pricing phase and then the bull market rally, bear market, and then within the bear market it touched the new all-time high. This is very risky, very risky. There are I I can't even think of one example as a coin that uh started to pump in the bear market, made a new all-time high, and then didn't correct and kept going until the Bitcoin bull market came. I can't think of any example of that. So just from heuristic, this is very dangerous.
A one one way that I have been doing the analysis is like this. So conservatively speaking, altcoins move together with Bitcoin. Right? So we looked at Bitcoin and we looked at its daily uptrend that just broke literally today when it broke below 75K. So my expectations for Bitcoin to head towards like 65K range at least. So that's a 13% drawdown. When this happens, how much downside will Hyperliquid have? Well, there are two ways to do this. Uh we can look at how much Hyperliquid dropped in the first major wave uh of the bear market. Okay, so when Bitcoin had a 50% drawdown, how much did Hyperliquid go down here from last September to February? And this was 65%, which is um 13, 1.3x multiple. So if Bitcoin draws down 13% here, Hyperliquid goes down 16.9%. Okay. So conservatively speaking, which is not that much. Okay. Only to here, to about uh just under $50, $49. So, will this be enough of a correction? You tell me. I don't think so. Okay. Because look at this pump alone. This pump alone tells me that Hyperliquid is in a very volatile stage. So uh I think below $50 is at least going to happen this year, like no question. Uh but what is the actual cheap valuation for Hyperliquid again? Well, I looked at it this way. So the more recent volatility is like this. Hyperliquid made a low in January and then uh when Bitcoin went to 60K on February 6th, Hyperliquid was right around here, $28ish. Okay. And to the recent all-time high, $64, that's a 124% increase. Okay? In that same period, Bitcoin went up uh like this, 38%. So 124 divided by 38, you have 3.26x multiple of volatility right now. Okay? Uh you can't just say, "Hey, Hyperliquid went up 3x faster than Bitcoin over the next uh past two months, but it's only going to go down uh 1.13x as fast in a drawdown." No, Hyperliquid is very volatile at the moment. So with this multiple, okay, 3.26x, 26x. We take that, we map it to the potential drawdown of Bitcoin of uh 13%. Remember this one right here. Okay. And let's just do that right here. Times 13%. You have 42.4% of potential drawdown. That I think is fair. So 42.4, 4 looks like this from current price to 42.4, basically this low right here. Okay, $34. And that's it. That's the range.
So if I were a super bull on Hyperliquid, I still would not buy right now because we are in a bear market. Bitcoin is entering chop again. If Bitcoin goes down 10%, I don't think anyone expects Hyperliquid to go up. So, uh if Bitcoin goes down 10%, at least Hyperliquid goes down to below $50. Uh however, if Hyperliquid is going to repeat the same kind of volatility that it had since uh early February, then if Bitcoin goes to 65K, Hyperliquid should go to somewhere around $35. So then that's an actual like cheap price. If Bitcoin goes to 65 and then you can map it a little bit further. If Bitcoin goes down to uh 60K, okay, so that's 20%. You take 20, that's 65% drawdown. So then you come to the Hyperliquid chart, 65% down. That's basically this low right here. This exact low in January, uh $20. So let's see. Okay, Hyperliquid fans will say, "Oh my god, like you're so you're so bearish. This can never happen." All I'm saying is if Bitcoin does this, goes down 20% to 60K, why wouldn't Hyperliquid go down a lot? Just because the chart is up a lot doesn't mean it's just only going to go up now. Okay, we are in a bear market. So, will Hyperliquid be cheap again once it does this? Of course, it will be. Okay, of course. So, let's see what happens in the next couple months. Uh if Hyperliquid can see the drawdown multiple against Bitcoin in the 3x multiple range. I mean, if Bitcoin goes down 1%, Hyperliquid goes down 3%, then very soon you're going to have cheap entries on Hype and Hype will have one more cycle. This is most likely going to happen. So if you look at the example of Solana. Okay, Solana first major bull run, big correction, second bull run. Hyperliquid major bull run. You can say this is big correction, but I don't think the major bull run has started yet. Okay. So because Hyperliquid has only had one cycle so far and a lot of the real adoption metrics just came up um and just started to show themselves with the pre-IPO HIP3 stuff. I think it has one more cycle and I think the new cycle we will see new highs above $60 and beyond, but I don't think we are going there right now. I think it has to come down when Bitcoin comes down because we're in a bear market. Everything follows that.
So uh my target for Hyperliquid is $35 and below if Bitcoin goes to 65K. And if Bitcoin goes to 60K, then I got to target something like, you know, low 20s again because I mean very simple, like Bitcoin going down, everything will go down. I'm not going to count Hyperliquid as a special case for this. Okay. Uh yeah. So overall I have a pretty fair stance on Hyperliquid. I want to buy it. I want to buy and hold it, but I don't think I want to do it now. Uh I will try to do it in the second half of this year. If we get into low 30s and then in the 20s, then that would be a really good buy again. But if it doesn't happen, it doesn't happen. That's okay. Okay. Uh I I think it will happen though. However, we are in a bear market. So, my probabilities lean towards the drawdown happening this year. So, I'm very patient on this. I I'm not rushing into this because I truly don't believe I'm missing any boat here. Uh but at the same time, I also recognize that Hyperliquid is truly a very unique technology, very unique platform.
And I'm going to leave you with this, uh, which I think is so interesting. Um, the S&P 500 index on the on Hyperliquid, this one right here, uh, TRFIN index, S&P 500. You see how the ticker is S&P 500. This is an official S&P 500 licensed ticker. S&P 500 licensed market. So the Dow Jones Industrial Average Indices uh company, okay, they uh license this to trade on Hyperliquid. So they have a partnership with Hyperliquid. That's crazy. This has truly transcended crypto and tapped into the TradFi market. And there is nothing bigger than this. The S&P Global is the biggest like bureaucratic, you know, top-down entity that controls who can trade what in the world. So, um there you go. Hyperliquid is truly special. Uh but just at the moment, it's a little bit expensive. So, I want to buy in the low 30s, below 30 ideally. Let's see if it happens. And I think Bitcoin's drawdown will bless us with this opportunity soon.
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