Hyperliquid ETF Investors Flee as Token Price Tumbles

Investors are withdrawing money from Hyperliquid-linked exchange-traded funds (ETFs) for the first time since they launched, with more than $13 million in net outflows in July. This is a significant reversal after nine consecutive weeks of inflows, totaling about $280 million.

The decline has coincided with a 13% monthly drop in Hyperliquid's HYPE token price, which traded near $54 this week and is roughly 30% below its mid-June record high of $76. Grayscale Research argues that the token undervalues revenue generated by the underlying network.

Hyperliquid has crossed $1 billion in cumulative protocol revenue, less than two years after launch, despite a broad crypto downturn and volatile macroeconomic conditions. The platform generates fees through its decentralized perpetual-futures platform and uses most of that income to repurchase HYPE, creating a direct link between trading activity and demand for the token.

Grayscale estimates Hyperliquid could approach $1 billion in annual revenue by 2027, supported by a recovery in crypto trading and additional income from stablecoin infrastructure. The firm expects between 270 million and 310 million HYPE tokens to be circulating by the end of that year, depending on how quickly allocations to core contributors enter the market.

Grayscale's valuation argument is based on an 'earnings per token' model, which produces estimated earnings per token of about $3.25 to $3.75. At the price used in Grayscale's analysis, HYPE was trading at roughly 15 to 18 times projected earnings, compared to expected multiples of about 35 times earnings for Coinbase and 40 times for Circle.