Hyperliquid just hit an all-time high, and if I were holding any of it, now would be the perfect time to take profits. This is not financial advice, because I don't have any Hyperliquid. But if I did have some, say a family member had some and passed away and I managed to get hold of it, I would sell all of it right now. Look at the price chart. This is where crypto retail gets wrecked. In my view, this is the worst time ever in history to buy Hyperliquid. There are several key things I'm going to cover here that are huge liabilities for Hyperliquid going forward, things that could cause the price, at a minimum, never to be this high again. Even if it goes up, it only has a little bit more room to possibly go up, whereas there's a ton of room to lose money from here. Easily, you could be looking at 90-plus percent losses in this token over the next few years.
Problem One: The Outstanding Token Value Is Ridiculous
The first huge problem is that the outstanding token value has gotten ridiculous. Right now, the tradable market cap is $17 billion. But there are $43 billion more in tokens that exist, unlocking and going to insiders and to the Hyperliquid Foundation. If I were them, I'd want to do anything it takes to get the price chart to pump like this, because if I had tokens unlocking, this is exactly the price I'd want to dump back into. So this is valued at $77 billion fully diluted, which is insane for a single exchange product that says it's decentralized but really isn't. The marketing is inaccurate.
It's valued right now at just a little below Solana, which is a huge problem, because Solana has been around for years with massive branding. It's been everywhere. And yet the fully diluted valuation for Hyperliquid is higher than Solana's right now, which is absolutely insane. This is something a basic investor can easily comprehend: how bad this number is. It can only go up so much more without the token dumpage having to be sold into the price to keep the flywheel marketing going. That's the first huge problem, and to me the outstanding token value is a total deal breaker.
Even some of the very best projects with the best technology, like Internet Computer, which has by far the best technology in crypto, saw their initial token unlocks contribute to dumping the price. You had investors who couldn't sell, then it unlocked over a period of years, and there was constant dumping whenever the unlocks came. Hyperliquid has the same problem, except way worse, on way bigger amounts of money, on a way smaller use case.
Problem Two: It's Closed Source and Not Really Decentralized
The second problem we need to address with Hyperliquid is that when you look at the actual documentation, it is closed source. There are some parts that are on-chain, but the website is not hosted on-chain, which means they can do anything they want in the front end of the website. And the source code is not available to the public, so you just have to trust them as to how orders and everything else are executed on the back end. For something marketing itself as a decentralized exchange product, the way I see it, it's mostly operating like a centralized exchange. That means it's competing with other centralized exchanges like Binance and Coinbase.
It also means that when users realize this is not truly decentralized, that they can ban entire countries from using it, like how the United States currently cannot use Hyperliquid, which prevents a whole lot of people from using it, other solutions have the chance to fill that void. A lot of the people trading on it don't realize this. They think it's so decentralized because you don't have to KYC right away. But they can lock your account, suspend your account, freeze your funds, and do anything they want with almost no transparency as to how it's being done, because it's closed source. That is a fatal flaw that could easily be pointed out by competitors, marketed against, and end up crushing the hype around the Hyperliquid token.
Problem Three: A Real On-Chain Exchange Already Exists
The third thing, which almost nobody sees coming, is that the technology exists to build a real, fully on-chain decentralized exchange. The Internet Computer Protocol has built an exchange right now called Multidex that is in the testing phase and is actually fully on-chain. If you compare Multidex to Hyperliquid: Hyperliquid is fast, but it runs on what amounts to a dedicated, purpose-built cluster that's entirely closed source. So when the whole value in theory is that it's decentralized, no outside company can see the code. The traders have to have full faith in the operator. You can't verify matching rules, fees, or whether the house quietly rips you off. Meanwhile, Multidex runs on a real general-purpose network, the Internet Computer, and is open source. Anyone can read it, verify it, fork it, or propose changes to it. That means there is a vastly superior competitor just about to launch.
Here's what's even crazier. Did you catch that? Anyone can verify it or fork it. That means the Internet Computer Protocol has infrastructure where anyone can make their own version of Hyperliquid for very cheap, if not nearly free, by forking it. Let's say someone has $10 million they want to turn into $100 million. Do you think they'd put it into Hyperliquid and trade on there? Or would they rather make their own version of Hyperliquid, pay people to market it, set up the tokenomics with their own new token, and just print money from it? That infrastructure exists right now on ICP, and you can see the test version in action.
It's set up on the Network Nervous System, which means you can't just ban an entire country from using it. It's truly decentralized, and all the code is public and open source, which means someone can't just stop you from trading on it because you pissed them off or got on the wrong person's watch list or bad side. So there's something vastly superior to Hyperliquid, and almost anyone can build it now with AI. Almost anyone can use Claude or Codex to go build their own version of Hyperliquid fully on-chain on ICP, and then put their own money into printing money all for themselves.
The Window Is Closing
So while Hyperliquid hit this brief window where it met a need and a market and got a lot of marketing and hype, the window is closing. The next wave of truly decentralized exchanges built fully by AI is coming, and almost everybody has every incentive to push people into their own environment and market their own exchange instead of Hyperliquid. To me, this is the perfect storm of events for Hyperliquid. When you put it all together, the absolutely horrible token unlocks, the fact that the meaningful parts of it are not actually decentralized, and the fact that competitors offering true decentralization are spinning up right now and are easy to recreate with AI, this indicates to me the perfect time to sell. Right here.
Again, this isn't financial advice, and I'm not a financial advisor. I'm all in on ICP because of the infrastructure, and I'm out here hoping every day that I can help some of you do better with crypto: make more money, waste less time, and lose less money. If you've enjoyed this, I'm available at jerrybanfield.com and you can chat with me. If you've got a coin you want to talk about, I have sponsored crypto videos available. If you want to talk about a coin and tell me about something, we can record a video and I can put it on the Crypto Reviews channel.
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