Repurchase has always been the main mechanism supporting the price of HYPE, however, the upcoming token unlocks cannot be ignored.

Written by: Dave

Abstract

HYPE has implemented a strong repurchase mechanism (approximately $1.3 billion to date, accounting for about 46% of the total token repurchase in 2025) and has robust revenue support. Almost all researchers are very optimistic about this token, but today I want to take a contrary view: several structural and macro factors make HYPE a less "sweet" deal.

1. Repurchase VS Unlock

Repurchase has always been the main mechanism supporting the price of HYPE, and many KOLs have mentioned this. However, the upcoming token unlocks cannot be ignored.

Starting from November 29, 2025, 373 million HYPE will be unlocked (approximately 37% of the total supply), with about 215,000 HYPE unlocked daily over a 24-month period. At current prices, this will create a potential supply pressure of about $200 million per month.

In comparison, the total repurchase amount for the entire year of 2025 is $644.64 million, averaging about $65.5 million per month, with repurchase funds sourced from 97% of transaction fees. Daily repurchases can only cover 25-30% of the daily unlock amount. Even if revenue continues to grow strongly, the repurchase capacity will struggle to absorb such a large scale of unlocks, inevitably leading to price compression.

2. Market Cycle Risk & Valuation Vulnerability

Currently, almost all valuations of HYPE (including the widely cited P/E, which is actually a TTM calculation model) are based on strong data from the past few months, during a bull market. However, as someone who has experienced the bear market of 2022, I believe macro cycle factors are key variables that must be considered. At least in the foreseeable future, the probability of a bear market is not lower than that of a bull market, and core assumptions and indicators are being challenged.

2.1 Current Overview

Current revenue indicators are indeed very strong:

• · Annualized revenue: $1.2 billion

• · Fully diluted valuation (FDV): $31.6 billion

• · Circulating supply: $20 billion (data source: Defillama)

• · TTM PE is approximately 16.67

• · Monthly compound revenue growth from December 2024 to August 2025 is +11.8%

These figures seem attractive compared to most U.S. companies, but therein lies the problem—during the upcoming bear market, HYPE may face a more severe Davis double whammy than other projects.

2.2 Bear Market Scenario and Davis Double Whammy

Looking back, the correlation coefficient between perpetual contract trading volume and BTC price is > 0.8 (across cycles).

• · 2022 Bear Market: Perpetual contract trading volume fell 70% from the peak in 2021.

• · Revenue dependence: 91% comes from transaction fees, making it highly susceptible to trading volume shocks.

• · Withdrawal delays: HLP treasury requires a 4-day lock-up, centralized exchange withdrawals take 24-48 hours.

This is a classic Davis double whammy structure: cryptocurrency asset prices fall → trading volume & fees decline, while valuation multiples contract → forming a vicious cycle.

The valuation of $HYPE is largely based on the performance during the bull market of the past year. However, in the Web3 space, revenue is highly cyclical. We should also adjust our fundamental assumptions accordingly.

Unlike U.S. stocks, which can be viewed as smooth growth since 2008, the cryptocurrency market still exhibits cyclical characteristics of boom and bust. Although macro market factors are indeed difficult to quantify, the ability to grasp this cyclicality is what distinguishes excellent traders from top traders in the industry.

2.3 Crypto-Native Indicators

We know that even in traditional finance, the price-to-earnings ratio (PE) is not the only indicator; there are also metrics like EV/EBITDA, P/FCF, and ROIC. For HYPE, some other important indicators also need to be considered, including:

• TVL: $4.3 billion, but showing a significant downward trend from the peak of $6.1 billion in September 2025.

• P/TVL: 2.0 (Solana 1.5).

• Market share: Market share has dropped from a peak of 80% to 70%, credit to the dark horse Aster. Of course, there are also lighter edgex and a bunch of others.

3. Am I a Foolish Dave FUDing HYPE? Not So Absolute

Although I currently do not support investing in HYPE, my bearish stance only applies to a mid-term perspective. If we look at a long-term investment cycle of 2-5 years, HYPE is definitely worth investing in. This needs no further explanation.

A complete investment decision depends on various factors, including position size, drawdown tolerance, and investment goals, etc.

All projects are under pressure in a bear market; what is the way out?

Prediction markets may currently offer a better cost-performance ratio. @a16z research indicates that the correlation between prediction markets and the broader market is only 0.2-0.4, compared to > 0.8 for $HYPE.

Moreover, 2026 will see several high-profile events, such as the World Cup (the last for many veterans like Messi and Ronaldo), the U.S. midterm elections, the Winter Olympics, and the League of Legends World Championship, among others. There will also be a considerable number of game, movie, and anime releases, such as GTA6, which is expected to usher in a big year for gambling. A significant amount of off-market funds may flow into this space, potentially impacting the Nasdaq. In a mid-term trend-following approach, prediction market projects are worth paying attention to.

Conclusion:

From a mid-term perspective, the risks of large-scale unlocks, revenue cyclicality, and changes in the macro market environment outweigh the returns brought by the current valuation. This article does not constitute any investment advice, and all investments carry risks. NFA, DYOR.

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