Hyperliquid: A Crypto with a Pulse

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So, Hyperliquid. It’s a name that sounds like something you’d find lubricating the gears of a particularly ambitious clockwork automaton. And, in a way, that’s not entirely inaccurate. Launched just over a year ago, it’s a cryptocurrency that’s rather rapidly elbowed its way into the top 20 by market capitalization, which, when you consider the sheer volume of digital tokens vying for attention, is a bit like winning a particularly crowded pub quiz. It’s the fuel for a decentralized exchange – a DEX, as the cool kids call it – and it’s currently shifting a respectable amount of digital money around, boasting over 1.4 million users. A significant number, if you think about it – roughly the population of Hawaii.

Early in the year, Hyperliquid seemed poised to be the breakout crypto of 2024. It began at $24.12, a perfectly respectable sum, and briefly soared to $59.30 in September. A bit exuberant, perhaps, but then again, exuberance is something of a hallmark of the crypto world. Unfortunately, much of that initial momentum evaporated by December. It has since clawed back some ground, and as of late January, it was up over 50% in a week, trading around $33.43. A respectable recovery, though it leaves it still some distance from its peak. Whether this constitutes a fading star or a buying opportunity is, as always, the million-dollar question. Or, in this case, the roughly $33 question.

The success of Hyperliquid is intrinsically linked to the health of the broader crypto market. It thrives on trading, and even more so on leveraged trading – which, let’s be honest, is a bit like driving a car with the brakes only intermittently functioning. A prolonged period of crypto lethargy, or a reduction in leverage, would certainly take the wind out of its sails. However, if more traditional financial markets decide to take the plunge and move ‘on chain’ – a phrase that always sounds like a particularly complicated plumbing issue – Hyperliquid could be well-positioned to benefit.

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Is Hyperliquid worth the digital fuss?

At the heart of Hyperliquid’s appeal are perpetual futures – or ‘perps,’ as they’re known. These are essentially contracts that allow investors to speculate on the prices of crypto and other commodities without actually owning the underlying assets. It’s a bit like betting on a horse race without ever having to visit a stable. Leverage, of course, amplifies both the potential gains and the potential losses – which is why it’s often described as a double-edged sword, or, perhaps more accurately, a very sharp digital katana.

Unlike traditional futures contracts, which have expiration dates, perpetual futures don’t. This allows traders to maintain continuous positions, adding flexibility and reducing costs. Hyperliquid offers leverage of up to 40-fold. Meaning, for every $1,000 an investor puts up, they can control a $40,000 position. It’s a thrilling prospect, naturally, but it’s also a recipe for potentially spectacular, and swift, financial mishaps.

Currently, Hyperliquid dominates the decentralized perpetual futures arena. According to CoinTelegraph, it accounts for nearly 70% of daily active users. And with over $8 billion in open interest – the total value of active contracts – it’s significantly ahead of its competitors, according to DefiLlama. It’s a commanding position, though it’s worth remembering that market dominance in the crypto world is often a fleeting phenomenon.

Leverage is a wonderful thing when markets behave as expected. However, when the winds shift, losses can multiply with alarming speed. Lenders, understandably, demand more collateral in sinking markets, and there’s always the risk of liquidation if you can’t provide it. This happened on October 10th, when a record $19 billion in liquidations shook the crypto market. It was, by all accounts, a rather unpleasant day for anyone caught on the wrong side of the trade.

Beyond the eye-watering leverage, Hyperliquid has a few other things going for it. It’s a Layer-1 blockchain, meaning it doesn’t rely on established networks like Ethereum or Solana for processing. It claims to be able to handle up to 100,000 orders per second and boasts zero gas fees. This efficiency could help it capture a share of the stablecoin and on-chain financial activity markets, though it’s a fiercely competitive landscape.

Regulatory and competitive headwinds

One aspect of Hyperliquid that gives me pause is its relative youth. The exchange launched in 2023, and the coin itself is barely a year old. Reliability will be crucial if it hopes to attract a larger share of the decentralized finance market. It’s worth noting that the Hyperliquid API was down for nearly half an hour last summer. Not a catastrophe, perhaps, but a reminder that even the most sophisticated systems are prone to occasional hiccups.

Regulatory concerns are also present. Hyperliquid doesn’t require ‘know your customer’ (KYC) registration and explicitly prohibits U.S. residents from using the service. Derivative trading is heavily regulated, and the lack of KYC puts it at odds with anti-money laundering rules. Crackdowns could significantly reduce usage, especially given that a surprising 25% of its traffic reportedly comes from the U.S., often routed through VPNs.

Finally, while perpetual futures are gaining traction, Hyperliquid faces stiff competition. Centralized platforms like Robinhood and Coinbase rolled out perps for U.S. customers last year. They may offer lower leverage rates and fewer cryptocurrencies, but they provide a legally sanctioned avenue for participation. And then there are the other DEXs all vying for a piece of the pie.

Hyperliquid: Not a path to instant riches

Building long-term wealth rarely happens by putting all your eggs in one basket. Especially a very volatile digital basket. Investing in Hyperliquid could diversify your crypto holdings, but only as a small part of a wider investment strategy.

Hyperliquid has a lot going for it, and perpetual futures trading remains a core part of the crypto industry. It may well perform well as crypto adoption increases and more transactions move on-chain. However, it’s far from the only player, and the regulatory clouds are concerning. If you’re looking to build wealth long-term, more established cryptocurrencies like Ethereum likely offer more utility and carry less risk. It’s a thought, anyway.

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2026-01-28 23:54