Written by: Arthur Hayes

Compiled by: Saoirse, Foresight News

We ventured into the frozen forest and climbed the steep volcano. It was just another day of skiing, hiking, and meditation. Surrounded by the silent, snow-covered woods, my thoughts roamed freely. The creativity that can emerge when you're fully focused, slowly climbing the volcano, placing one ski in front of the other thousands of times, is astonishing. I cherish these three months of tranquility.

Both body and mind crave rest and recovery, and during the ski season, this means going to the real ski resort. On my first day at the resort, I removed my traction pads, boarded a mechanical chairlift, and in just a few minutes, I was lifted hundreds of meters into the air. The chairlifts and chairlifts were fantastic, but sometimes I had to share the tranquility with others.

I don't talk much in the cable car, so I sit quietly in a corner, but there are always some lively people at the ski resort who like to chat with strangers to pass the time.

The questions were all harmless, but they allowed the other person to define me in their mind. We always ended up talking about our professions—and I, a skier every day, neither a guide nor an instructor, seemed odd. I politely replied, "I work with computers." The advantage of the tech industry is that everyone assumes you've made some money, but no one can delve deeper, because they don't even understand how electricity works, let alone the amazing things you can do with a "computer." The conversation naturally cooled down there, and thank goodness, I could finally get off the car and ski.

What exactly do I, or our Maelstrom team, do?

We are traffic manipulators, making money by monetizing attention. Our main method is going long on Bitcoin and various altcoins; we rarely short. By getting the market to focus on our views, we believe that in the long run, the market will validate our judgment.

Now, please focus your attention on Hyperliquid (HYPE).

I dislike short selling because without leverage, your maximum potential gain is only 100%, while your maximum potential loss is unlimited. I always pursue long positions, not short positions, therefore I am always a net long position in the market.

In this challenging phase, Bitcoin has decisively broken through its previous high. Are there any truly high-quality altcoins that can achieve absolute gains?

The answer is: yes. Because during every period of sideways movement or bear market in cryptocurrencies, the best-performing altcoins are always exchange tokens. Even when prices fall, exchanges can still continue to earn transaction fees, sometimes even more than when prices are rising, especially when they benefit from the long-term growth in trading volume on decentralized exchanges (DEXs).

During the period from market consolidation to decline in early 2023, GMX was the most sought-after exchange token. In April 2023, GMX hit an all-time high of $90. Why? Because at that time, it far surpassed other tokens in perpetual contract DEX trading volume, with a surge in open interest and trading volume, driving up protocol revenue. More importantly, the vast majority of the revenue went to GMX holders.

When the consensus on fiat credit expansion shifts from growth to contraction, which exchange token can still experience a surge?

Data taken from DefiLlama on March 7, 2026.

Hyperliquid is currently a leading perpetual contract DEX and boasts the highest revenue outside of stablecoins. It uses 97% of its revenue to buy back HYPE tokens from the market. No other project in the entire crypto industry returns such a high percentage of its profits to token holders as Hyperliquid.

Unfortunately, holding stablecoins like USDT or USDC doesn't allow you to share in their net interest margin. Therefore, if the market believes HYPE can achieve absolute gains, then it's a strong possibility. My target price for HYPE in August 2026 is $150, roughly five times its current price of around $30 when I wrote this.

To go from "hell" to "Valhalla," Hyperliquid needs to restore its 30-day revenue to an annualized level of $1.4 billion—a level it reached last August. To make the following text easier to understand, I'll present the financial model first.

The key assumptions I need to verify are the price-to-earnings ratio (P/E) and the monthly unlocking and release of HYPE tokens by the team. The P/E ratio formula is:

P/E = (Circulating supply × Price) ÷ (30-day annualized revenue × Repurchase ratio)

My model predicts that total revenue from HIP-3 and non-HIP-3 sources will grow from $843 million in March to $1.4 billion in August.

I will explain how Hyperliquid regained its all-time high 30-day annualized return amid intensifying competition in the perpetual contract DEX market.

The final part estimates how many HYPE tokens the team will receive each month based on data from the past three months.

Stress testing the model under different scenarios can effectively improve the credibility of the assumptions. I will examine some of the assumptions from a pessimistic perspective to see how "intense" it would take to believe my target price of $150.

CEX vs DEX

The best thing about Hyperliquid is that its trading volume growth doesn't require an increase in the total global crypto perpetual contract trading volume. If just a few percentage points of perpetual contract trading volume from centralized exchanges shifts to Hyperliquid, it could easily double its 30-day annualized revenue within a few months. A mere 3.97% increase in market share would see Hyperliquid reach its $1.4 billion annualized revenue target. Considering Hyperliquid didn't even exist less than three years ago, this is entirely feasible.

Hyperliquid's ability to grab trading volume from CEXs is commendable, but which crypto derivatives will actually attract users? People come for stock perpetual contracts and binary options, and stay for Bitcoin, Ethereum, and Solana trading.

HIP-3 allows anyone to list perpetual contracts without a license. By staking 500,000 HYPE, you can create any trading market you want using Hyperliquid's matching and margining engine. TradeXYZ does just that; its flagship products are perpetual contracts for silver, gold, Nasdaq 100, and S&P 500.

Incidentally, the silver and gold markets, launched less than three months ago, have already seen daily trading volumes reach tens of billions. At a time when the corrupt fiat currency system arbitrarily modifies rules and suppresses people's desire to break free from authoritarian currencies, this will become a new arena for price discovery.

Screenshot taken on February 5, 2026, at 11:20:00 UTC.

In just four months, HIP-3 trading volume contributed nearly 10% of Hyperliquid's total revenue. Permissionless listing has always been the holy grail of DEXs, and the rapid growth in trading volume proves that this is the key to Hyperliquid's success in outpacing its competitors.

For Hyperliquid to achieve a 66% revenue growth from March to August, HIP-3 must take the lead, especially given the current sluggish market capitalization across the crypto market. Hyperliquid must provide traders with fresh and exciting on-chain trading instruments. Precious metals, AI-related stocks, and crude oil are precisely what ordinary players want to trade. Today, through perpetual contracts, anyone globally can trade 24/7 with higher leverage than traditional financial exchanges.

Based on these reasons, my model predicts that HIP-3 revenue will increase by 160% within 6 months.

The icing on the cake is the prediction market. Hyperliquid recently announced that HIP-4 will support permissionless prediction market deployments. I expect HIP-4 to launch within the next three months. Players will flock to Hyperliquid's prediction market to trade binary options and intraday expiring options (0DTE). It's difficult to predict revenue growth before launch, so I haven't included it in my model. If the Hyperliquid team delivers high-quality code as usual, and it significantly boosts revenue almost immediately, that would be an extra bonus.

Unfortunately, Hyperliquid is not the only perpetual contract DEX. Competition is fierce, as this is the next major battleground for trading. The emergence of numerous low-fee and zero-fee DEXs late last year has lowered Hyperliquid's expected valuation.

So what happened from then until now that made me believe again that Hyperliquid's dominance is unshakeable?

Is it true?

For crypto CEXs or DEXs, faking trading volume is incredibly easy.

Back in BitMEX, we often joked about having a "volume scalper"—the exchange would run a program that automatically generated fake trades to increase activity.

Many leading exchanges now routinely use wash trading tools to claim they are the "largest," misleading traders into believing there is genuine liquidity. For DEXs, creating wallets for wash trading is even simpler, making it a primary source of wash trading.

Liquidity mining is also a common method to increase activity: DEXs award points or platform tokens based on trading volume, and traders then exchange trading volumes between wallets.

Wash trading and liquidity mining do not increase real liquidity. We cannot accurately determine the proportion of trading volume these activities represent. The only objective metric for measuring the quality of an exchange is the ADV/OI ratio (average daily trading volume / open interest).

Because traders must use real funds as margin to open positions, open interest (OI) reflects the level of real user engagement with the platform. Average daily trading volume (ADV) is easily inflated by wash trading and cryptocurrency mining, but by adjusting for OI, we obtain organic trading volume driven by traders with genuine risk appetites. Therefore, a lower ADV/OI ratio is better.

Among the top 5 perpetual contract DEXs, Hyperliquid has the most genuine trading volume because it has the lowest ADV/OI ratio. Traders tend to migrate back to Hyperliquid when they realize that much of the liquidity on competitor platforms is fake, or that points/token mining has ended.

In the long run, Hyperliquid's share of real trading volume will continue to increase. This will solidify HYPE's narrative of "not fearing competition."

Many people remember that one of the main reasons I was tactically bearish on HYPE in the short term was the competition from low-fee DEXs. Now I believe that Hyperliquid is number one in the industry in terms of "real trading volume," and I am no longer worried about competition for at least the next six months.

Regarding competition, the next question to consider is: after factoring in slippage, which DEX truly offers the best liquidity?

I took snapshots of the order books of Bitcoin/USD perpetual contracts from five platforms and calculated the slippage for market buy and sell transactions with notional amounts of $100,000, $1 million, and $10 million.

As you can see, large transactions on Hyperliquid are most often at the lowest cost. Therefore, even if competitors offer 1–2 basis points lower explicit fees, truly high-volume traders will still flock to Hyperliquid because they can trade on larger scales with minimal market impact.

I'm rich!

Hyperliquid, with a team of only 11 people, has created the best DEX product ever. Wealth should rightfully flow to them through locked HYPE tokens.

When Maelstrom was bearish on HYPE late last year, he raised a concern: the uncertainty surrounding how many tokens the team would release to the market each month. Since Hyperliquid has not accepted venture capital investment, whether the team voluntarily refrains from selling newly unlocked tokens is essentially a political decision made internally by Jeff and the team. They have already restricted token sales.

After distributing nearly 20% of reward tokens in November and December of last year, the team distributed only about 1% in January and February. I speculate that the initial high distribution was for tax payments and improving living standards; once these needs were met, the team significantly reduced the release to help HYPE rebound. This is just my speculation.

History doesn't repeat itself exactly, but it does rhyme. Based on this, I assume the monthly release is the average of these four months: 815,750 tokens.

Look ahead

The market is forward-looking. How much are players willing to pay for Hyperliquid's future earnings? HYPE's current P/E ratio is around 12. How does it compare to traditional financial exchanges?

To determine a reasonable valuation level, I referenced the current price-to-earnings (P/E) ratios of top global exchanges like the Chicago Mercantile Exchange (CME), Robinhood (a new brokerage targeting young, aggressive investors), and Coinbase (a cryptocurrency exchange heavily influenced by US regulations). These institutions have a wide P/E range, roughly between 26 and 40. In contrast, $HYPE, with a P/E ratio of only 12, is clearly severely undervalued.

The undervaluation is partly due to the fact that Hyperliquid is not a publicly traded company, thus incurring risks associated with smart contracts and counterparties, naturally resulting in a lower valuation multiple. Furthermore, most mainstream centralized spot exchanges do not support $HYPE trading, making it difficult for ordinary investors to purchase, preventing it from being hyped to extremely high valuations like many altcoins. Even so, a P/E ratio of 12 is still ridiculously low.

In just a few months, Hyperliquid's HIP-3 stock index and precious metals trading markets have become key price discovery venues for traditional financial exchanges like the CME when they are closed on weekends. I had no idea my computer needed to go golfing on weekends.

At least from an industry trend perspective, HYPE has a higher valuation premium.

Explanation regarding market capitalization and fully diluted valuation (FDV):

I'm using market capitalization (CQC) instead of FDV, as the two differ due to their varying circulating supply. CQC only counts currently circulating tokens, not all future tokens represented by FDV. Given this is a 6-month transaction, using current CQC is reasonable. Admittedly, Hyperliquid may launch another airdrop in the future, thereby increasing the circulating supply. However, as of now, the team has not hinted at an upcoming airdrop, so I'm not considering this risk or the resulting impact on circulating supply.

stress test

Assuming the team unlocks 9.91 million HYPE tokens per month, and the market only assigns a forward P/E ratio of 12, what would happen if Hyperliquid's 30-day annualized revenue still rebounded to a record high of $1.4 billion?

The target price will fall to $58, still about 75% higher than the current $30. That's not a bad result.

I haven't made pessimistic assumptions about revenue for a simple reason: if Hyperliquid's revenue can't grow from its current level, the token won't rise. If you think this way, then don't buy HYPE under any circumstances.

HYPE expert

Source: CoinGecko

I used HYPE/BTC to create a chart to illustrate that the market has recognized the value of this token.

We all know painfully that unless you short it, Bitcoin would have fallen from its local low of around $20 last September when HYPE hit that level. I believe the catalyst for HYPE's resurgence is the dramatic drop in team token releases from 9.91 million in January to a mere 140,000.

Furthermore, competitor DEXs' points and token incentives are expiring, rapidly diminishing their appeal to traders. Their remaining trading volume may be inflated, but as I demonstrated earlier, Hyperliquid offers the lowest transaction costs in terms of order book liquidity.

Our Maelstrom team started testing the waters with small positions when the price was just over $20. While skiing and hiking, I kept thinking: if the macroeconomy continues to be sluggish in the short term, what should I invest in? What kind of projects are truly high-quality—those with real users, real revenue, and the ability to return profits to token holders?

From these perspectives, Hyperliquid is the highest quality project in the entire crypto industry. After in-depth research and writing this article, my confidence has only grown stronger.

As macro investment guru Druckenmiller said, "Invest first, do your research later."

Therefore, HYPE quickly became our largest liquid altcoin holding. We plan to continue selling all other low-quality assets and continuously add to our HYPE position within the current price range.

Backpack任命前Stripe和瑞士信贷银行高管Oliver Sleafer为新任CFO

Popular Articles