Hyperliquid, which emerged as a prominent player in crypto derivatives following its 2023 launch, may face a challenging future, according to BitMEX co-founder Arthur Hayes.
Despite the decentralized platform’s recent surge in popularity, which has propelled its native token to new all-time highs, Hayes expressed concerns in a Decrypt interview about impending competition from Wall Street and established cryptocurrency entities. He believes this could undermine a key driver of the digital asset’s value.
Hyperliquid’s model relies on a consistent flow of trading fees to repurchase its token from the open market and permanently remove it from circulation. This scarcity-boosting mechanism, Hayes warned, leaves the protocol particularly vulnerable to any abrupt loss of market share.
“At the end of the day, this is a cash story,” Hayes stated. “There will be more competition in real-world asset perps, whether that’s from centralized exchanges like Binance or TradFi exchanges.”
Arthur Hayes (@CryptoHayes) had been a vocal supporter of Hyperliquid as its token reached record highs. On Thursday, he announced he had “dumped” his holdings, citing potential risks he perceives for the decentralized upstart.
A Shift in Stance
A day after his interview, Hayes informed his followers on X that he had “just dumped” his entire holdings of HYPE tokens, along with another digital asset. He attributed this decision to an anticipated rise in energy prices, a series of high-profile IPOs, and a perceived shift in President Trump’s stance on artificial intelligence.
“Time to take profit,” he added, less than two months after publishing an essay predicting that Hyperliquid’s native token “is going to $150 by August 2026.”
According to CoinGecko, HYPE was trading around $59 on Sunday, marking a 14% decrease over the preceding seven days. The asset had reached a fresh all-time high above $75 just last week. Hayes’ abrupt change in position drew criticism from some observers. However, during his interview, he had praised Hyperliquid’s success in facilitating trading for typically illiquid markets, particularly oil, over the weekend.
“Perennial crypto haters had to acknowledge that price action and price discovery for these key variables happen over the weekend on a crypto trading platform,” he said. “I think this is a watershed moment, and what caused people to wake up.”
Real-World Assets and Competition
Hyperliquid expanded its offerings to include derivatives for real-world assets, such as gold and silver, through an upgrade in October. On Tuesday, the platform’s official X account announced that the total value of outstanding positions linked to these markets had reached $3 billion.
Data from a Dune dashboard indicates that the platform has repurchased 26.6 million HYPE tokens, permanently removing 579,603 from circulation. At current prices, the larger sum represents approximately $1.56 billion worth of Hyperliquid’s native token.
Hayes highlighted the aggressive push by major U.S. financial institutions into the perpetual futures market. Unlike traditional futures, perpetual futures, or “perps,” do not have expiration dates, allowing traders to speculate indefinitely with periodic payments to maintain price alignment.
Under Hayes’ leadership, BitMEX launched the world’s first perpetual futures contract in 2016, a concept that originated in the early 1990s with Nobel Prize-winning economist Robert Shiller. Hayes now predicts that established Wall Street firms will eventually adopt these products as a means of survival.
“All these traditional exchanges are going to be forced to launch a competing product,” he stated. “By next year, we’re going to see some decently liquid products in TradFi that use this perpetual swap architecture.”
