One of the less-discussed aspects of crypto investing is the number of cryptocurrencies that have shot to fame with huge gains, only to lose momentum and spend years in limbo. Hyperliquid (HYPE +1.73%) may well become one of them. It rose about 150% in the first nine months of last year, then stumbled before recouping some of the loss. Still, the crypto is down about 30% from its all-time high in September 2025.
CRYPTO: HYPE
Key Data Points
Hyperliquid customers use the utility token HYPE for the blockchain's decentralized exchange (DEX), a place where trading occurs without an intermediary. Although it may not go to $0 unless the platform fails, there's a good chance it will be another in a long line of forgettable former crypto stars.
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How Hyperliquid and perpetual futures work
Understanding Hyperliquid means venturing into the land of perpetual futures, or perps. These are types of derivatives that investors use to speculate on whether an asset's price will go up or down. For crypto traders, they offer leverage, which is essentially borrowing money to amplify your position. I'm not a fan of leverage, especially in a volatile asset like crypto, because it is too easy to bet the wrong way and lose all your money.
For example, let's say you have $500 to invest in Bitcoin. You use leverage to magnify your investment by 10, giving you a $5,000 position. If Bitcoin rises 10%, you would gain $500 instead of just $50 based on price movement alone. However, if Bitcoin falls by 10%, the platform would liquidate your position and you would lose everything with no chance for recovery.
Hyperlink accounted for about 40% of the roughly $500 billion in perp trading that occurred in March, according to crypto data site The Block. However, other platforms, such as Aster and EdgeX, are eroding Hyperliquid's dominance. Not only that, but centralized exchanges are getting in on the perp action. Crypto exchanges such as Coinbase -- platforms with central bodies to facilitate trades -- are also increasing their perp offerings, which could eat into Hyperliquid's market share.
Perps are today's crypto craze
Hacks and technical issues are risks for every cryptocurrency, but they are more of an issue for Hyperliquid because it uses automated systems to manage leveraged investments. A serious pricing glitch, for example, could wipe out people's leveraged positions. That could cause the platform to collapse and the price to go to zero.
Another issue is regulation. Hyperliquid is based outside the U.S. and offers risky products with no know-your-customer (KYC) restrictions. Without KYC, there are no controls on where investor funds come from, so you may unwittingly be trading with criminals. Hyperliquid says it blocks access from sanctioned countries like Iran and North Korea, but that doesn't mean much since it also blocks U.S. users, and that doesn't stop people using VPNs to access the platform. At some point U.S. regulators probably will crack down on these unlicensed DEXs.
More than anything, Hyperliquid has had its moment in the sun and will likely follow the price performance of other once-popular DEXs. For example, Uniswap surged in 2021 when it introduced new functionality to compete with centralized exchanges and the ability to access risky tokens and generate yield. Now it is down almost 93% from its heyday, and there's no obvious pathway to recovery.
Hyperliquid may bounce a few times, but as the sector becomes more competitive and regulatory pressure increases worldwide, Hyperliquid will most likely trend lower.
