Author: Nancy, PANews

In less than a year, HYPE broke its historical high and continues to break records. Its market capitalization has surpassed that of established cryptocurrency Dogecoin, officially entering the top ten in global cryptocurrency market capitalization.

Both fundamental and funding factors drove HYPE's strong rise. However, with the US officially opening the door to compliance for the crypto perpetual contract market, the next challenge facing Hyperliquid is how to obtain a ticket to the mainstream financial market.

HYPE bucks the trend and hits new highs, with over 90% of revenue used for share buybacks.

While the overall crypto market is performing poorly, HYPE has bucked the trend and surged.

According to CoinGecko data, HYPE's price has broken through $72, and its market capitalization has exceeded $16.1 billion, setting a new all-time high. Over the past 30 days, HYPE has risen by 75.4%; if the time frame is extended to nearly a year, its increase is even higher at 122.7%, significantly outperforming most mainstream crypto assets.

As HYPE continues its upward surge, short sellers have suffered heavy losses. According to Onchain Lens monitoring, Loracle, HYPE's largest short seller, has been continuously reducing its short positions. Its 5x leveraged short positions have shrunk from an initial $102 million to approximately $60.94 million, currently holding 843,232 HYPE short positions (worth approximately $60.7 million), with a paper loss exceeding $22 million. This whale has been continuously shorting HYPE above $40 since April of this year, repeatedly adding to its position in an attempt to lower its cost basis. However, as HYPE's price has risen, its losses have continued to widen. This short trade not only wiped out approximately $40 million in profits from the past 10 months on the Hyperliquid platform but also incurred an additional loss of over $5 million.

The bullish camp reaped substantial profits. On-chain data shows that one trader profited over $1.4 million in just two days using a HYPE 10x leveraged long position; while a whale with an address starting with 0x082 has accumulated over $46 million in unrealized profits since December 2024, holding a 5x leveraged long position.

The core driving force behind HYPE's price increase primarily stems from the continuous token buybacks conducted by Hyperliquid's Assistance Fund, which manages the buybacks. Hyperscreener data shows that, to date, Hyperliquid's cumulative protocol revenue has approached $950 million, with approximately $920 million used for HYPE buybacks, representing over 96% of its protocol revenue allocated to token buybacks. This month alone, Hyperliquid repurchased $44.6 million worth of HYPE tokens at an average price of approximately $69.6.

Going forward, as Hyperliquid's trading volume and revenue continue to grow in sectors such as pre-IPO and prediction markets, the protocol will continue to convert cash flow into market buying, thereby providing long-term support for HYPE prices.

ETFs continue to attract funds, with Wall Street capital accelerating its entry.

In addition to buyback agreements, the familiar DAT mechanism in the cryptocurrency world has also become a catalyst for the recent price surge.

Hyperliquid Strategies Inc. (PURR), the DAT company behind Hyperliquid, was recently added to the Russell Microcap Index. Since its inception, the company has invested approximately $216 million to purchase 7.3 million HYPE tokens, bringing its total holdings to approximately 20 million HYPE tokens.

The market generally believes that after being included in the Russell index, PURR is expected to attract passive index funds and benchmark tracking funds, thereby attracting new sources of liquidity and further increasing market attention to the Hyperliquid ecosystem.

ETFs are also a significant force supporting demand for HYPE. SoSoValue data shows that the two HYPE spot ETFs (Bitwise BHYP and 21Shares THYP) have maintained continuous net inflows since their launch, with a cumulative net inflow of nearly $110 million, while Bitcoin and Ethereum spot ETFs have seen net outflows during the same period. Notably, Bitwise allocates 10% of its BHYP ETF management fee revenue to directly purchase and hold HYPE, meaning that the expansion of the ETF's size will continue to translate into new buying pressure in the market.

Grayscale is also accelerating its product development, recently submitting an amended S-1 filing for a HYPE-backed ETF, with plans to use 2 million HYPE tokens (worth approximately $115 million) as seed assets. In its latest report, Grayscale believes that Hyperliquid is rapidly evolving from a crypto perpetual contract exchange into a blockchain financial infrastructure platform, with the potential to challenge traditional derivatives trading systems and grow into a financial services giant.

This Wall Street script has also played out with ETH and SOL before.

It is worth noting that Hyperliquid will unlock approximately 9.92 million HYPE tokens on June 6, 2026. Based on the current price of approximately $72, the unlocked value is approximately $713.8 million, representing approximately 2.54% of the circulating supply.

The US approves its first batch of perpetual contracts, marking a crucial moment for Hyperliquid.

The US approval of crypto perpetual contracts (Perps) has further fueled the entire industry.

On May 29, the U.S. Commodity Futures Trading Commission (CFTC) announced its approval for KalshiEX LLC to list BTCPERP perpetual contracts. This is the first truly compliant Bitcoin perpetual contract in U.S. history, marking the official opening of the compliant cryptocurrency perpetual contract market in the United States. Simultaneously, the CFTC issued an explanatory letter and a no-action letter to Coinbase, allowing it to offer cryptocurrency options and perpetual contract services to U.S. users through its affiliated international exchange, Deribit FZE.

This series of historic actions is seen by the market as a significant signal of a shift in the US regulators' attitude towards crypto derivatives. As the compliance framework becomes clearer, it provides a compliant entry point for more institutional funds, potentially driving a new growth cycle in the PERPS market.

However, for Hyperliquid, the leading decentralized perpetual platform, regulatory openness does not mean it has crossed the compliance threshold. The crypto community has recently been debating Hyperliquid's compliance and transparency.

Kyle Samani, former co-founder of Multicoin, posted on X that Hyperliquid is merely "Binance 2.0," relying on short-term regulatory arbitrage to gain its position, and predicted that no genuine American company would partner with it. He even launched a bet challenge, arguing that Hyperliquid will be unable to launch a US-compliant front-end in the short term.

In response, some community members expressed their willingness to wager $1 million, predicting that Hyperliquid could launch a US-compliant front-end within three years. However, Kyle subsequently rejected the three-year wager, suggesting that Hyperliquid might establish Hyperliquid US by acquiring DCOs (Derivatives Clearing Organizations) and DCMs (Designated Contract Markets), adopting a strategy similar to Polymarket. Interestingly, despite Kyle's continued public skepticism towards Hyperliquid, Multicoin Capital began large-scale purchases and staking of HYPE several months ago.

6MV investor Mike Dudas countered that Kyle's comparison of Hyperliquid to Binance was unreasonable because Hyperliquid does not directly invest in its listed assets, does not sell assets through perpetual contracts or Launchpad mechanisms, does not extract a percentage of the supply of listed assets, does not manipulate the price and flow of platform assets through related parties, and its financial structure is transparent and on-chain, with its platform economic mechanism programmatically guiding token holders.

Compared to the community debate, what has attracted more attention from the market is the obvious change in ICE's attitude.

A few days ago, at a recent industry conference hosted by Bernstein, ICE founder and CEO Jeffrey Sprecher suddenly publicly "named" Hyperliquid and gave it high praise, saying, "It's even bigger than Nasdaq, and it only has 11 people. It's a very smart team."

Jeffrey Sprecher specifically mentioned that Hyperliquid has already listed SpaceX-related derivatives, which will be put to the test by the market when SpaceX officially goes public on June 11. Whether its market price will affect the IPO will be very interesting. He believes that Hyperliquid, with its blockchain settlement, stablecoin margins, and leverage mechanism of up to 100x, is attracting more and more market makers and professional trading institutions.

He also explicitly stated that Hyperliquid's perpetual contracts are essentially swap products under the traditional financial framework, and revealed that ICE has had multiple rounds of communication with the Hyperliquid team to discuss areas of business overlap and potential cooperation opportunities.

For an industry giant with a long history of deep involvement in traditional financial infrastructure, such a public and positive assessment of a crypto-native protocol is unusual. Moreover, just weeks ago, ICE was reported to have pressured the CFTC and the US Congress to increase regulatory scrutiny of Hyperliquid. Now, the positive signals from its top management, and even discussions of potential collaborations, add further ambiguity to Hyperliquid's future compliance efforts.

In summary, although the CFTC has opened the door to compliance for the crypto perpetual contract market and Hyperliquid has proven its product competitiveness, the core challenges it faces in truly penetrating the mainstream US financial market go far beyond just technological innovation.

Whether Hyperliquid embraces compliance or stays true to itself, its choice will influence the evolution and landscape of the crypto market.

The Grayscale Hyperliquid ETF has a management fee of 0.29%, lower than Bitwise and 21Shares.

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