I Sold Hyperliquid
Why I cut a 60% position to 10% after 17 months
Hey friends,
This Saturday, 16th of May, 2026, I’ve made an important decision in my portfolio.
After 1 year and 5 months of holding hyperliquid’s token (HYPE), I’ve rebalanced the position to a more sensible allocation of 10% of my total portfolio.
On a normal long-term investment portfolio, a 1 year and 5 month hold might seem ridiculously short to be making a big deal about. But in this case, this position alone was almost 60% of my entire portfolio, and by consequence, my net worth.
I have been holding an uncomfortable position since hype TGE’d in 2024. At one point it was over 90% my networth. Over time I’ve sold about half my initial stake, some for rebalancing purposes, and some for legal fees and other costs. But over the last few months this position has become quite a burden.
You can understand that trying to run a systematic book, how much this affects my thinking. Each day, on one side I am thinking carefully about the kind of risk exposures my portfolio of strategies has, and on the other I am carrying a degenerate 60% bet of my entire stack on this one crypto asset.
Don’t get me wrong, I love hyperliquid, and I will still hold 10% of my long-term stack in the token, but I don’t hold confidence in anything to make the kind of bet I had 1 day ago. I’ll explain other concerns during this post but for now I want to say that this is purely a strategic rebalance.
The final sell price was around $41.7.
What a ride from $2 when it TGE’d in 2024…
(I omitted some information there so that my wallet doesn’t get traced. Although if it does gets traced, who cares anyways?)
I have been quite happy holding this while the systematic book was quite directionally short.
Why? I wrote about it in an article where I dove into my performance last year. The main reason was because the strength of hype was acting almost like a hedge (not really) to my portfolio. When crypto was going down, the portfolio made money, while the hype exposure lost. However since HYPE had this relative strength to the rest of the crypto market, when I made money on the short leg of the systematic book, I lost a small amount in hype, and when I lost money on the short leg, i made A LOT more with hype.
That was indeed a cool dynamic as it acted sort of (again not really) as an hedge to a book that was relatively short to the market. Actually gave me a few ideas for periods similar to this in the future. In any case, as you can see from the Positioning Over Time picture, the portfolio has been trending towards a quite market neutral risk exposure and sometimes lately, a bit net long.
That means that now not only is my systematic book some days carrying a slight long tilt, add to that the massive HYPE directional exposure I was carrying, and you get an enormous directional bet on crypto.
You can see that on the 16th by summing up the long exposure, 60% of the book was long, while it should have been close to even.
So I decided to write this post today, to explain why I’ve decided to rebalance that exposure back to a responsible risk target, and to put an end to that chapter. I think that these lessons and thoughts, might be something good to come back to in the future, as it was a large focus of mine for the past year and a half.
These are the topics of today:
What was my target with HYPE
What are the risks of hyperliquid
What are the macro risks for crypto in general
How likely is it to hit the target and when
What is the opportunity cost of having so much capital in a speculative bet
The general consensus around it
Nothing in this article will be about financial advice or what you want to do with your exposures. This is merely the thoughts of a mediocre trader and a worse even fundamental investor, putting his thoughts together on his decisions.
Lets go on with it.
What was my target with HYPE
To be honest here, I had no reasonable target. I could say $100, or $150, but that has no fundamental valuation of any sort. These were more hopeful targets based on the classical crypto trader vibes rather than any valuation. But that isn’t the decision of a business, to hope for something to happen. As a trader you must always consider the expected value of your positioning. I have none at this point. Sure I could make the argument when it was trading at $2 when it opened or when it crashed to $9 back in April, but can I really make it at $40B FDV? Not to a point where I am comfortable with the stake I had before.
Up to a certain point there were no valuations to be made in crypto, everything was vaporware based on false promises of technology that was going to revolutionize the world, and in the end was just a nice way to fatten the pockets of investors and insiders.
Hyperliquid was different. Hyperliquid is different.
It was the first project where I felt i could take a bet on because of its community aligned vision. It is a project where revenue and activity is directly rewarding its stakeholders, the community. No only that, the product is insanely good.
In a short year, it has achieved a massive valuation of $40B putting it just below solana and in the top 10 spot of all cryptocurrencies by FDV.
Yes I know before you come to me with the market cap BS, I don’t care. The price you pay for the company is not whats floating but whats the total aggregate value. What you think about the unlocked supply is your own speculation and not a given fact. So when I assess a company, I value it by the total value I am paying, not what I think is going to happen to a portion that is not yet unlocked.
At a $40B FDV and a total annualized revenue of $631M, Hyperliquid is trading at 63x revenue to FDV. Given that hyperliquid has a relatively small core team and a small cost base, it’s basically earnings.
If you compare to other more established players in the tradfi industry, you can see that it’s already trading at a premium to those companies. Am I saying that they all are the same thing? No. There’s differences , like you could argue for the L1 premium, the composability, and other similar legitimate arguments. But I need to know that I am betting on something trading at a premium to its cousins.
Even if we compare it to other trading venues (sorry about the aster reference lol).
Sure, hyperliquid is not the same. There is not much like it. I agree. But still, these are the numbers we are paying for, and we need to be aware of it so we can have something to compare it to.
From a value perspective its really stretched. At least to my comfort. In a few years we may read this and see how wrong I was, but the truth is, wrong or right, it doesn’t matter when it’s really wrong to hold something you have no business holding. I know where I make my money and it ain’t betting on future extreme valuations with 60% of my portfolio in it.
What are the risks of hyperliquid
The biggest risks I see are two:
Regulatory
Hacking
There may be other but they are not as relevant to me right now. The regulatory one is more of a concern into the 2028 US elections imo. If you’ve been following the crypto sector, you know that the current administration is heavily, let’s call it “allocated”, to it. That makes it an easy target for people to go after. Sure, crypto has had adversity in the past, and will continue to have. The narrative is that it must continue thriving despite that regulatory pressure. But it’s a real risk. Especially given that now hyperliquid is becoming a major player in the exchange world, no matter how much talks about decentralization (which is not fully yet) , you can see how other more established players that went through the regulatory hoops might feel about it and start making way more noise than before.
When it comes to hacking, in a system that is governed by smart contracts, it’s always a looming risk over your head that at some point something is about to happen. Especially now with the landscape changing with AI agents and the capabilities of running these systems at capacity 24/7 scouting for vulnerabilities, how much longer will a strongly motivated team not be able to hack something and then the question is, what will be the damage?
And the hacking concern is not even just technical. Social engineered hacks are also a concern. We’ve seen lately protocols being targeted for months, from the inside, until an exploit was available and only revealing itself months after. These are extremely sophisticated attacks. Sure, I bet that the hyperliquid team has all of this in high alert, if I am thinking about it, they’ve thought it over 1000 times, but still, a risk lurking, worth consideration if you hold any significant stake in the success of the protocol.
What are the macro risks for crypto in general
Another thing that concerns me here is how extended equities are and their correlation to crypto, and consequently hype. If you’ve been paying attention to equities , you can see how this has been an uponly market, with very little breaks in between. Crypto on the other hand, despite all the supposedly good news around the clarity act, a favorable USA regime, etc, has been quite disappointing to say the least.
Personally it makes sense to me that all the speculation going into AI captures the entire mindshare of capital that is focused on that sector right now. Crypto largely can offer a speculative vehicle and besides that not much else. You can make the argument about the agent economy using crypto rails, and tbh that makes some sense to me, but I don’t bet on those sort of narratives. I will be allocated to that, doing the stuff I do if/when that happens.
If we look at BTC’s correlation to equities, we can see that it hovers around that 0.5 right now. Its also trading at a beta of 1 to equities. BTC moves ~1:1 with equities on average but at roughly 2× their standalone vol, so its definitely no hedge to tradfi.
But this is BTC, what about HYPE?
Hype has had periods where it trades with very low correlation to crypto or equities, but that correlation has been growing as of late. During the time I was holding it, my observation was that interestingly enough hype had moments of being completely uncorrelated to equities OR crypto as a proxy. It was on its own sphere. Especially during large geopolitical events, because of the hip-3 markets brought a lot of volume and speculation.
Given this, I am still making the implicit bet that the uncorrelated behavior of hype will continue and that when/if equities has a pull back or a slower period, that HYPE will perform beyond what I could do in my own allocation. That is another bet layered on top of the other risks we just discussed. Although that this is more short-term in nature.
How likely is it to hit the target and when
I do believe that it is inevitable that if none of the major risks take it out of the game, that HYPE will trade at higher prices. In the short-term we also had the news about coinbase becoming the official USDC treasury deployer on hyperliquid.
What does that mean?
Well, hyperliquid has around $5B of USDC sitting on the platform, but hyperliquid is not an issuer of the stablecoin, circle is. That meant that hyperliquid had no claim on the interest that the $5B yields for circle (the issuer) and coinbase (main distribution partner). Coinbase becoming the official treasury deployer on Hyperliquid means that the vast majority of that yield is now shared with hyperliquid, which at current rates should be $100M-$200M yearly. That is a significant bump in the current revenue.
Also all the metrics like TVL continue to grow despite competitors in the perp dex space having had their TVL completely destroyed in the last few months.
The volumes continue to be pretty sticky despite being in a terrible market for crypto right now.
And a large contributor to this has been the HIP-3 markets that have been widely spread as a trading vehicle both for crypto natives, and now more and more, not so native as we’d think.
If this growth continues, and regulatory hurdles don’t add pressure to this side of the business, this is a major focus point that could drive a lot of attention towards perps on hyperliquid, increasing the demand for the product.
What is the opportunity cost of having so much capital in a speculative bet
Now, this is the most important question in my mind.
I’ve done fairly decent on my systematic crypto portfolio over the last 5 years. It continuing to perform is obviously not guaranteed but its something I deeply understand. I might be dumb about everything else but something that I have devoted my entire time to is running a systematic book of strategies and I am much more comfortable doing that. Even if HYPE reaches those targets, it isn’t a far stretched thing to say that I will achieve the same results for , what I consider to be, considerably less risk and speculation than a single bet. Also since so much capital is stuck on this one single bet, I can not increase my other strategies capital, without risking getting too close to margin calls.
Also the systematic portfolio has been going through a bit of a drawdown lately due to the rise off the lows in crypto. So that is perfect timing to add size to the portfolio.
After the rebalance, I bumped the systematic portfolio by 32% and this capital will be put to good use in stuff that I understand.
This capital I know will have higher chances of yielding decent returns over the next few years.
The general consensus around it
Hyperliquid went from this fringe new project, to being mentioned on bloomberg.
To being mentioned by traditional tradfi folks , with massive audiences.
There’s already 2 live trading ETF’s on the market now. Bitwise (BHYP) and 21shared (THYP).
Social media influencers are all talking about it.
All of these factors is stuff that we, early on supporters, were betting on to happen eventually because we knew it was a great product before general consensus. As these things materialize, we are betting on things that are no longer as apparent as they once were, or that I’m not that confident about.
Now this next part is not so much of a value judgement but it’s something that has been bothering me for a while. There’s this new wave of “hyperliquid supporters”, that are completely unhinged and bully around anyone that doesn’t align with their world view.
I like to buy things when the consensus is against me. Back in April-2025 I was perfectly happy to buy when the general consensus was that it was going to 0 and there was no point in holding. I knew that was clearly a wrong take. Hyperliquid had gone through one of its worst times in its growth and the sentiment was extremely negative. I can’t put to words how bad it was back then.
I remember I was sweating the position, because of the events around that time were really bad.
The JellyJelly fiasco
Rumours of NK wallets scouting for vulnerabilities
Down -70% from its highs
Coupled with a really hard general market with the Trump tariffs fiasco, it was truly the depths of the market when I decided to increase my stake.
Now that everyone and their grandmothers hold hype somehow, it’s hard for me to have the consensus on my side, and that be a 60% allocation of my portfolio. Again, there’s nothing wrong with a consensus take, the consensus is that we should buy and hold SPY for the long-term, and is it that a reason why I should sell it? Probably not a wise decision. But then you’re just harvesting risk premium, and for that, I already have my systematic book covering it for far less idiosyncratic risk than would be holding this massive hype stake.
These things are not binary. They are measured on a spectrum. It isn’t because something is consensus that I shouldn’t hold it. Its also not because something is a contrarian view that I should take it. It’s a multi-variate equation to risk taking, and that is how I view my decisions.
Conclusion
There’s nothing fancy about these takes, I kept it simple and straight to the point as i like it. I could be wrong, or I could be right, regardless, to me, I’ve made the correct financial decision as a prudent portfolio manager.
If I am trying to maximize long-term EV this was a correct decision regardless of price. I know I make money doing what I always did, why bet the farm on a thing where the best case scenario for upside in the next few years is a 2x or 3x from here? Sure it would be nice to have it, but I’m quite confident that I am going to capture it doing what I know to do.
You can’t let a trade define you, you need to be logical.
I probably held it at this size for far longer than I should have had.
It probably was a -EV decision that just happened to end on the positive side of the spectrum.
Who knows?
But this is my decision now and tbh with you, I feel good about putting an end to this massive risk that was over my head for a year and half.
Will I ever take such risks? Sure I will. I am a risk taker at the end of the day and if ever comes an opportunity such as this one, I will definitely be there and for size. But for now I rest, and do the things I’ve always done.
Hope you’ve enjoyed today’s article.
Disclaimer: The content and information provided by the Trading Research Hub, including all other materials, are for educational and informational purposes only and should not be considered financial advice or a recommendation to buy or sell any type of security or investment. Always conduct your own research and consult with a licensed financial professional before making any investment decisions. Trading and investing can involve significant risk of loss, and you should understand these risks before making any financial decisions.
Oh man one week too soon… been following since a while .. thanks for your content and wish you the best