On Sept. 23, Hyperliquid (HYPE -0.94%) hit a new all-time high of $97.98. At the time, it looked like Hyperliquid would easily blow past the $100 mark by the end of Q3.
Instead, Hyperliquid fell by 17% and now trades at just $81. That raises an interesting question for crypto investors: Should they buy the dip, or should they look elsewhere for upside?
Buy the dip
Hyperliquid has been one of the true breakout cryptocurrencies of the year. The HYPE token is up more than 235% year to date. Since its launch back in November 2024, HYPE is up a staggering 2,440%.
Hyperliquid has become the place to go to trade perpetual futures ("perps"). By some accounts, Hyperliquid accounts for 60% or more of all perpetual futures trading on decentralized exchanges. No other decentralized exchange even comes close.
Image source: Getty Images.
That market dominance helps explain Hyperliquid's meteoric ascent and why investment firms are now rushing to launch new spot Hyperliquid ETFs. In fact, the ascent has been so rapid that it has even attracted the attention of President Trump, who is now encouraging Hyperliquid (based in Singapore) to set up shop in the United States.
And there's another intriguing angle to Hyperliquid. The decentralized exchange uses trading revenue to buy back its token daily. This works similarly to a stock buyback program. Theoretically, this helps to keep a floor under the price of the HYPE token.
Look elsewhere
So far, so good, right? Hyperliquid is the market leader in a rapidly growing niche of the crypto market. It has the support of the Trump administration. And it has a token buyback mechanism to prop up its price.
However, momentum for Hyperliquid is cooling fast. Over the past 90 days, Hyperliquid is up "only" 19%. That's worse than the performance of market bellwether Bitcoin, which is up 28% over that same period. Investors are taking on much more risk by investing in Hyperliquid and not seeing a commensurate reward.
CRYPTO: HYPE
Key Data Points
This cooling momentum is not a coincidence. It's the result of two events that took place during the summer.
The first was the CFTC's decision to greenlight perpetual futures trading in the United States. Several market participants -- including Kalshi, Coinbase Global, and Robinhood Markets -- immediately jumped in, and it now looks like Hyperliquid will face a much more competitive market going forward.
The second was the Clarity Act's failure to pass the Senate. This immediately calls into question recent pro-crypto moves by the Trump administration, especially with midterm elections looming. Most notably, there has been pushback over U.S. regulators giving the green light to perpetual futures trading, and concerns have been voiced over Hyperliquid's offshore status.
As a result, I'm looking elsewhere for upside in 2026. Until the legal and regulatory clouds around Hyperliquid dissipate, I'm not going to believe the hype about HYPE.
