When HYPE becomes market consensus, where does the buying come from?

Original Author: Catrina

Translation: Peggy, BlockBeats

Editor’s note: Recently, HYPE remains one of the most attention-grabbing assets in the crypto market. According to CoinGecko data, HYPE's price has hovered around $42, rising about 8% and 16.8% over the past 7 and 30 days, respectively, with a market cap of approximately $10.1 billion, and it has been referred to as one of the hottest crypto trades of the year, noting that HYPE still recorded about a 60% increase in the broader crypto bear market.

However, the author questions the room for further price increases from a price structure perspective: 75% of the token supply remains unlocked, indicating there will still be sustained selling pressure in the future; the current FDV is already near or exceeds the valuation range of some traditional exchanges; and at this price, it remains unclear where new marginal buyers will come from, whether they are retail investors, traditional institutions, or crypto funds.

More concerning is that HYPE faces not only valuation issues but also risks such as regulation, hacking, key person dependency, and the migration of trader liquidity. For an asset that has already been fully observed by the market and is concentrated on by KOLs, the real question is no longer "Does it have a narrative?" but rather "At this price, who will continue to buy?"

The value of this article lies in providing a calm contrarian perspective: when a crypto asset transforms from alpha to consensus, what investors need to reevaluate is not just how excellent the project itself is, but whether the current price has already overdrawn the future.

The following is the original text:

Previously, I moved this article to Substack because this view is quite controversial, and I'm not the type who enjoys arguing on X. But in the end, I decided to put it back on X. I want to publicly record my thoughts, regardless of whether I'm right or wrong.

Writing this article won't get me more friends. Many people in the crypto circle whom I like are super bulls on HYPE, and I have no motivation to FUD it. I write this because amidst the fervor in CT, someone needs to provide a calmer perspective. Here, I have organized my contrarian views on HYPE into a complete article.

First of all, I am not denying that HYPE is undoubtedly one of the most impressive projects currently. Everything below is not an evaluation of HYPE’s fundamentals as a business, but merely an objective judgment of its price trend.

To put it directly: HYPE is not cheap. I do not believe it can increase more than double from the current price, that is, continue to double from today’s $40. When market sentiment recovers, the price may briefly spike to more than double, but within a relatively reasonable fluctuation range, in the long term, its price will likely settle below $80. And this is already a fairly optimistic judgment. The reasons are as follows:

75% of the unlockable token supply will bring about 3 times the selling pressure

The current FDV of HYPE is about $40 billion, but the circulation is only 25%, and the unlocking of tokens will continue until 2028.

We can take a few comparable objects to do a basic sanity check:

• CME's historical highest market cap is about $118 billion, approximately 3 times HYPE's current FDV;
• ICE's historical highest market cap is about $107 billion, approximately 2.5 times HYPE;
• Nasdaq's historical highest market cap is about $57 billion, approximately 1.5 times HYPE.

If those buying HYPE today want to earn double, they must assume:

• Either the HYPE team will never sell tokens; or the 3 times new net selling pressure from future team unlocks will need 6 times marginal buying to absorb; or some combination of the two;
• HYPE must not only exceed Nasdaq but also approach the historical high of CME. Note that CME is the largest derivatives trading market in the world, processing over $1,000 trillion in nominal trading volume annually, with a 130-year regulatory moat.

So the real question is: at this price, who are the marginal buyers?

Market buyers roughly fall into two categories: retail and institutional.

Retail: What "secrets" or "alpha" can trigger new buying now? Almost everyone, including their grandmothers, knows that HYPE is a star project in crypto. HYPE is no longer anyone's secret. There may still be some observing buyers in the OTC market, but how many are left?

Institutions: This part could truly change the situation. Institutional buyers can be divided into two types:

i. Wall Street hedge funds or mutual funds;

ii. Crypto hedge funds.

For the first category, I am very skeptical that traditional asset management institutions would touch HYPE, as it is positioned in a non-compliant gray area. The absence of KYC setups and regulatory arbitrage are indeed its advantages for rapid expansion, but can endowments and mutual funds really accept and underwrite this risk? You might say PURR is a pathway, but that depends on their own risk tolerance, which I cannot assess.

Even if they are willing to buy, do you think these seasoned Wall Street professionals would compare HYPE with anyone? It would not be BNB; more likely, it would be Nasdaq, whose historical high is merely 1.5 times HYPE's current FDV; and further up, it might barely compare to CME, whose historical high is less than 3 times that of HYPE.

For the second category, you can ask any rational crypto hedge fund manager on CT: when HYPE's FDV reaches $80 billion, will they continue to hold? Even if they want to hold, they must sell down due to their fiduciary responsibilities to LPs. Expecting HYPE, a non-compliant perpetual contract exchange, to hit a valuation exceeding CME, will seem quite unrealistic from an LP's perspective.

So tell me: where do these marginal buyers come from? And we need many such buyers.

The risk of hacking is on the rise

Whether it's the Lazarus Group or the potential emergence of Mythos-level AI hacking capabilities, if someone wants to attack crypto, where do you think the biggest honeypot would be?

Not to mention key person risk

The key person risk of Hyperliquid is already considered one of the most severe in crypto. Jeff leads an 11-person team, adhering to the philosophy of product first and not needing VC, with every part of the infrastructure — matching engine, validator code, execution logic — built internally.

If anything goes wrong, can anyone point to public documentation on backend knowledge transfer? Of course, I hope such things never happen.

Yan is the only strategic and technical anchor for this protocol, which processes over $10 billion in daily transactions. There are no named co-founders, no visible succession plans, and no governance oversight. I sincerely hope Jeff is allocating a substantial portion of profits for safety and protection.

Crypto traders are essentially mercenaries

For those projects trying to retain users, blockchain interoperability is definitely a bug, not a feature. At some point, traders will believe that HYPE's upward potential is becoming too slow and will shift liquidity to the next potential 10x target.

In crypto, network effects are not stable. I have written extensively on this issue before.

As for those who compare it to BNB — come on, that's not a valid benchmark for three reasons:

BNB has already 100% unlocked, with no new net selling pressure; while HYPE's current circulation ratio is only about 24%.

Binance is willing to do much more for BNB, actively pushing it “to the throne”; while HYPE is more like a laissez-faire strategy.

Regarding price trends, the most important question remains: "Who are the marginal buyers?" For rational institutional buyers, comparable objects would be CME/Nasdaq, not BNB.

To summarize, if I were an investor:

If I want to buy crypto and hold it for several years, why would I choose HYPE? It has about 76% of tokens yet to be unlocked, meaning about 3 times net supply pressure. In contrast, why not choose BTC at $70,000? BTC is the only digital gold, has been 100% circulated, has no centralized control, and is completely irreplaceable. HYPE merely needs to find three times the new net buyers to maintain its current price.

If I want to buy a crypto that could possibly 10x, why would I choose a token with an FDV of $40 billion, already high consensus, increasing competition from DEXs, and each KOL shouting about their own positions? In contrast, why not choose a memecoin that has dropped over 90% from its peak, has a Lindy effect, strong meme attributes, and is also volatile enough?

You can ask those shouting KOLs: would they buy HYPE at this price?

HYPE has already made many people rich. So the real question you should ask yourself is: who will become their exit liquidity?