Hyperliquid Just Had It's Breakout Moment

Summary

• Hyperliquid pricing the SpaceX pre-IPO is, per Yano, “the first time since Polymarket and the elections in 2024 that we’ve had a mainstream breakout thing.” HYPE is at $61 off a $23 Liberation Day low while Bitcoin sits muted at $76K; he’s “still extremely long HYPE here” because it’s “clearly the best thing happening in crypto today” and it’s “only just starting to touch the general public.”
• The pre-IPO markets are already functioning as TradFi’s price oracle. A viral photo from the Cerebras IPO floor showed a trader watching Hyperliquid’s pre-IPO market on Bloomberg; SpaceX now trades around $2.1T — a roughly 35% premium to the indicated $1.5–1.75T pricing — and Jason says hedge funds that mostly can’t access TradeXYZ still use it to handicap the open, the same thesis ICE underwrote with Polymarket.
• Santi’s valuation check: HYPE is now “fully valued” and “more of a venture investment from here.” Roughly $700M of revenue is mostly profit, but OKX is still a significantly bigger business and just raised from ICE at a $25B valuation; Santi’s math puts HYPE at roughly 60x run-rate earnings on $58–60B fully diluted versus Coinbase at 25–30x. Jason says core crypto-perp volume fell about 30% in Q1, basically in line with centralized exchanges, with no share dislocation.
• Santi’s two-belief framework for staying long: non-token markets keep growing — Hyperliquid is “probabilistically the number one” there — and crypto rebounds, with HYPE the best expression of both. HIP-3 volume has gone from 0% to roughly 45% ex-crypto (oil, commodities, stocks) since its end-of-October launch — “the most bullish indicator of any protocol in crypto at large,” a “Paul Tudor Jones moment for the industry.”
• Santi’s equilibrium warning: perps will replay prediction markets. Polymarket boomed when nothing else traded those markets during those hours, then Kalshi, the ICE deal and IBKR compressed the edge; CFTC perp regulation comes “relatively soon” and Nasdaq/CME say 24/7 trading probably arrives this year. The on-chain-options precedent is that crypto options skyrocketed once CME offered IBIT options. There is lots of runway until then, and regulated perps would validate the product and expand the market.
• Flows suggest a different buyer: funding on HYPE perps has gone negative during the runup while spot outruns the perp — heavy spot buying, little profit-taking, “maybe something very fundamentally different” per Rob. Yano’s read: that’s bull-market behavior — “why would I ever sell my HYPE if we’re entering the next crypto bull season?” — and this could be the first cycle institutions buy tokens beyond the majors in size.
• SpaceX itself is the market’s biggest open question. Santi hears hedge funds saying that if the IPO doesn’t rip and hold, “it is going to be very bearish for the rest of the market” — though he’s not bearish himself. Elon’s $28.5T “largest actionable TAM in human history” — excluding China and Russia “for illustrative purposes” — gets its due mockery.
• Ethereum: five Foundation departures capped by Bankless’s David Hoffman selling his last ETH — “ETH the asset is increasingly questionable.” Jason repeats his October Cisco analogy — “it’s a slow death” — while Santi counters that “institutional adoption doesn’t happen without ETH” as the most battle-tested issuance layer, even as Canton is “crushing the institutional BD game” and nearly every institution-chain announcement outside ETH mainnet “is paid for, almost always.”

Deep dive

1. Bloomberg screens on the Cerebras floor: Hyperliquid becomes TradFi’s price oracle

• Santi’s opening specimen: a photo from the Cerebras IPO trading floor — posted by the Benchmark person who did the deal — showed a trader with Bloomberg up, watching Hyperliquid’s pre-IPO market “where the price discovery was happening.” Santi said he did not think the trader knew what he was doing; the image went viral, and with SpaceX coming up “everyone’s looking at Hyperliquid yet again.”
• Jason’s numbers: SpaceX is trading a little over $2.1T against indicated IPO pricing of $1.5–1.75T — roughly a 35% premium, similar to the premium TradeXYZ showed on Cerebras before it doubled at the open. Volume and open interest are small, but hedge funds that mostly cannot access TradeXYZ are using it to handicap where things open — the same thesis ICE underwrote when it invested in Polymarket.
• Jason’s caveat that frames everything: “from a price oracle perspective, there’s no doubt that this has entered the mainstream” — but whether traditional investors can actually trade these markets “is a different story.”

2. The broken IPO machine, and crypto’s once-every-18-months breakout list

• Jason’s setup: average IPO-day pop of 18% since the 1980s, Figma roughly 30x oversubscribed, and Bill Gurley’s long crusade for direct listings (Coinbase); Santi adds Spotify — so “when is Bill Gurley going to go buy Hyperliquid?”
• Cerebras was priced at $185 and opened around $350. Santi initially said TradeXYZ had it near $340, then corrected himself to “like $200-something” pre-IPO; Jason said it had ripped to about $340 before opening. The exact pre-IPO figure remains disputed, but both agreed TradeXYZ was directionally close.
• Yano’s canon of breakout moments, once a year or every 18 months: Paul Tudor Jones calling Bitcoin “the fastest horse in the race,” BlackRock’s Bitcoin ETF becoming the fastest-growing ETF ever, Polymarket calling the 2024 elections — and now Hyperliquid “pricing the hottest IPOs in the history of the world.”

3. Valuation fight: Santi says HYPE is now a venture bet

• Santi’s case: roughly $700M of revenue, mostly profit — but OKX is still a bigger business “pretty significantly” and just raised from ICE at a $25B valuation. HYPE was long “by far and away the best fundamental story”; now it’s “fully valued… definitely more of a venture investment from here.”
• Jason says the reduction in core crypto perps on Hyperliquid in Q1 was basically the same as on centralized exchanges — “as exposed to the reduction in trading volume as the centralized exchanges were,” so there was no market-share dislocation. HIP-3’s non-crypto markets helped the business hold up relatively better.
• Santi dons the “Patagonia vest”: roughly $800M last year, or a rough $1B run rate this year; roughly $58–60B fully diluted (outstanding closer to $34B per CoinGecko) puts it at about 60x earnings for a very fast-growing protocol versus Coinbase at 25–30x — “not that expensive on a relative basis.” Jason’s OKX rebuttal — 13 years old versus two — collapses into agreement: “it’s a venture bet.”
• Santi’s two-belief framework for going long here: non-token markets keep growing, where Hyperliquid stands “probabilistically” as the number-one protocol; and crypto rebounds, for which “Hyperliquid is probably the best bet you could express.” The downside case: no institutional interest, HYPE back at $40 or $30, and the rest of crypto doing much worse than Hyperliquid on a relative basis.

4. HIP-3 is the whole bull case — and Santi’s prediction-market equilibrium warning

• Jason and Santi: since HIP-3 went live at the end of October, ex-crypto markets (oil, commodities, now stocks) have gone from zero to roughly 45% of Hyperliquid volume — “the most bullish indicator of any protocol in crypto at large… this is getting the attention of people that had zero interest to come and bid crypto.”
• Santi’s analogy: Polymarket grew explosively when nothing else traded those markets during those hours; then Kalshi grew, the ICE deal happened, IBKR and others launched, and “the market is finding an equilibrium.” The same may happen for perps: CFTC regulation is likely “relatively soon,” while Nasdaq and CME have said 24/7 trading may arrive this year. The precedent is on-chain options: Deribit was largest, but crypto options skyrocketed once CME offered IBIT options. There is lots of runway until then, and regulated perps would validate the product and expand the market.
• On pre-IPO specifically, Santi favors synthetics to avoid the SPV physical-settlement mess, pointing to Robinhood’s attempt as “just super messy.” Jason had earlier noted that Anthropic said people could not buy those SPVs.

5. SpaceX: the largest and most venture-driven IPO — and the market’s biggest open question

• Santi hears hedge fund managers saying that if the SpaceX IPO does not rip and hold, “it is going to be very bearish for the rest of the market” — though he is “not bearish, for what it’s worth,” and would not necessarily buy SpaceX despite loving Elon. Jason says SpaceX’s terminal value may exceed $2T, but discounting that value back makes the purchase case difficult.
• The TAM slide, as quoted by Santi: “We believe we’ve identified the largest actionable TAM in human history. We estimate that our quantifiable TAM is $28.5 trillion” — including roughly $22T of “enterprise applications,” while excluding China and Russia “for illustrative purposes of sizing our TAM.”
• Jason’s confession lands the joke: “I’ve seen a lot of TAM slides in my life… I have never once looked at one.”
• Still, Jason credits Elon for front-running OpenAI and Anthropic and sucking up the retail bid; Santi says it is the largest retail allocation ever. Santi and Jason agree Elon and Jensen are among the best salesmen ever, echoing Mark Benioff’s line that the CEOs summoned to Beijing are “the country’s best salesmen.”

6. The flows are different this time: negative funding, spot buying, no profit-taking

• Rob — long since somewhere in the $20s, plus a personal position — is surprised by the order book: barely any profit-taking into the runup. The tell: funding on HYPE perps has gone negative, “very uncommon” when things rip, meaning spot is outrunning the perp — “probably a lot of spot buying… maybe something very fundamentally different that’s happening in terms of the buying,” possibly buyers who “are not just crypto natives.” He contrasts Venice, which ripped reflexively, sold down, and then regained.
• Yano’s pushback: quick profit-taking is bear-market behavior; in bull markets runs extend — “why would I ever sell my HYPE if we’re entering the next crypto bull season?” Rob concedes: “that might be right, and maybe this is the start of that mentality.”
• The wider tape, via Santi’s conversation with a head of one of the biggest trading firms: not BTC/SOL/ETH but “all of the good alt tokens are going to break out” — Venice, HYPE and LIT — “good businesses with a token attached instead of just a blockchain.” Yano goes further: this could be the first cycle institutions buy tokens beyond the majors in size.

7. Tokenized stocks: the SEC exemption is proposed, but less DeFi-friendly than the timeline thinks

• Yano flags reports that the SEC is preparing an innovation-exemption framework for tokenized stocks, possibly as early as next week — potentially allowing third-party issuance of tokenized Apple, Nvidia or SpaceX shares without issuer consent or backing and without full broker-dealer registration. That makes him reconsider his own “this could end in tears” call on the SPV wrappers.
• Rob’s cold water from DC conversations: no SEC guidance is out yet, these things are debated to the last minute, and expectations are “probably far more bullish for DeFi than it is actually going to be true.” His expected shape: a hybrid ATS-style regime — KYC gating at on/off-ramps, some licensing, “not as tight as broker-dealer licenses” but not DeFi as it exists today. Kyle Samani is right to keep telling people to “read CLARITY” — much of the commentary is “explicitly untrue” against the current act.

8. Ethereum: when a member of the church leaves — slow Cisco death vs. battle-tested base layer

• Five high-profile Ethereum Foundation exits (Tim Beiko, Carl Beekhuizen, Barnabé Monnot, Trent Van Epps and Josh Stark) were capped by Bankless’s David Hoffman selling his last ETH: “I have consistently supported Ethereum, the network. ETH, the asset, is increasingly questionable. Let’s not conflate the two.”
• Jason suggests David’s sale could be a bottom signal. Santi distinguishes that from employee departures: “David is an evangelist… a member of the church. When a member of the church leaves, that’s a little bit different.”
• Jason’s October call: “protocols just don’t die… it’s a slow death” — a Cisco that never reclaims its high absent a major shift, with ETH at roughly $255B versus Hyperliquid at roughly $40B despite Hyperliquid’s traction. Yano notes Cisco is up 50% in six months; Santi replies, “I know, it took 20 years.”
• Santi’s counter: “I don’t think institutional adoption happens without ETH” — the most battle-tested chain for asset issuance, with institutional risk-takers minimizing career risk by choosing what everyone else uses. But Jason says the EF has not had the BD game: Canton is “crushing the institutional BD game,” according to someone at Solana, which was itself worried about losing deals to it. That is part of why Etherealize and the EF’s institutional sales team matter.
• Jason’s block-space addendum: “there is not enough block space still to this day” if all assets trade on-chain, so multiple winners are possible rather than a zero-sum outcome. He initially says ETH is not doing a good job selling its blockspace, then concedes it is doing a decent job; the token’s value capture remains a separate relative-value question.
• Santi’s cynical footnote, accepted by Jason: “every announcement you have ever seen other than on ETH mainnet is paid for, almost always” — including one undisclosed deal “coming soonish” that Jason calls the most money he has ever seen a chain pay. As for Tom Lee’s end-of-year $9–12K ETH and $150–200K BTC targets, Santi calls him a career permabull; Jason says, “Tom Lee and Cathie Wood and Jim Cramer, they’re all the same. You know what you’re getting.” Rob then asks what separates Elon’s take from Tom Lee saying Ethereum goes to $12K; Santi’s answer is the layup: “Elon is building the thing.”