BitMEX Co-Founder Arthur Hayes Warns of Hyperliquid's Market Share Losses

Arthur Hayes warned that Hyperliquid's use of trading fees to burn tokens exposes the protocol to market share losses. Less than two months after predicting HYPE would hit $150, BitMEX co-founder Arthur Hayes liquidated his entire position. Despite Hyperliquid securing $3 billion in real-world asset open interest, Hayes anticipates fierce competition from Wall Street. Hyperliquid has surfaced as crypto’s derivatives darling since it debuted in 2023, but the honeymoon may not last forever, according to BitMEX co-founder Arthur Hayes. Although the decentralized upstart’s surging popularity has helped spur its native token to recent all-time highs, the outspoken Hayes told Decrypt in an interview that looming competition from Wall Street and established crypto players threatens to erode one of the digital asset’s core drivers. Hyperliquid relies on a steady stream of trading fees to buy its token off the open market and permanently remove it from circulation—a mechanism designed to bolster scarcity, that Hayes warned, leaves the protocol uniquely exposed to any sudden loss in market share. “At the end of the day, this is a cash story,” he said. “There will be more competition in real-world asset perps, whether that’s from centralized exchanges like Binance [or] TradFi exchanges.” A day after his interview, Hayes informed followers on X that he had “just dumped” his entire stash of HYPE tokens, alongside another digital asset. He cited an expected uptick in energy prices, a string of oxygen-sucking IPOs, and an about-face by President Trump on AI. “Time to take profit,” he added, less than two months after penning and sharing an essay on why Hyperliquid’s native token “is going to $150 by August 2026.” HYPE changed hands around $59 on Sunday, a 14% decrease over the past seven days, according to CoinGecko. The asset notched a fresh all-time high above $75 last week. Hayes’ sudden shift rubbed some onlookers the wrong way, but during the interview, he lauded Hyperliquid’s ascent as a venue for trading otherwise illiquid markets on the weekend—especially for oil. “Perennial crypto haters had to acknowledge that price action and price discovery for these key variables happen over the weekend on a crypto trading platform,” he said. “I think this is a watershed moment, and what caused people to wake up.” Hyperliquid began supporting derivatives for real-world assets, including gold and silver, via an October upgrade. On Tuesday, the platform’s official X account said that the total value of outstanding positions tied to such markets had reached $3 billion. So far, the platform has bought back 26.6 million HYPE, while permanently removing 579,603 HYPE from circulation, according to a Dune dashboard. The larger sum represents around $1.56 billion worth of Hyperliquid’s native token at current prices. Hayes noted that U.S. giants are aggressively pushing into the perpetual futures space. Unlike traditional futures, the derivatives—also known as perps—don’t expire, allowing traders to speculate indefinitely amid periodic payments that keep prices anchored. Under Hayes, BitMEX debuted the world’s first perpetual futures contract in 2016, a concept established long ago in the early '90s by Nobel Prize-winning economist Robert Shiller. These days, Hayes predicts that Wall Street incumbents will eventually adopt the products to survive. “All these traditional exchanges are going to be forced to launch a competing product,” he said. “By next year, we’re going to see some decently liquid products in TradFi that use this perpetual swap architecture.”