As billions of dollars leave Bitcoin and Ether funds, money is flowing into a corner of crypto that promises something investors have long struggled to find in digital assets: a clearer path from economic activity to token value.
The strongest sign is the HYPE token linked to the booming crypto exchange Hyperliquid. While Bitcoin, Ether and smaller altcoins have stumbled in this year’s market downdraft, HYPE has climbed to records. The token reached an all-time high of $75.50 on Monday and has risen about 180% this year, lifting its market value above $16 billion and pushing it into the top 10 digital assets by market capitalization, according to CoinGecko data.
The move stands out in a market otherwise marked by fading risk appetite. US Bitcoin and Ether exchange-traded funds have posted net outflows of about $3.4 billion and $674 million, respectively, since May. By contrast, two newly listed funds from Bitwise Asset Management and 21Shares, tracking HYPE, have gathered about $180 million in assets within three weeks of launch.
The inflows are modest compared with the rush that greeted spot Bitcoin ETFs. But they stand out at a time when money is leaving many of crypto’s largest investment products, suggesting investors are becoming more selective about where they want exposure. Rather than buying the asset class as a broad macro trade, they are backing tokens linked to specific trading platforms, revenue streams and operating performance.
“The institutional era for crypto has resulted in more disciplined capital allocation decisions and a focus on fundamentals,” said Zach Pandl, head of research at Grayscale Investments, which debuted a Hyperliquid ETF on Wednesday. “The success of the HYPE token ultimately depends on the fee revenue of the platform, just like any other financial technology.”
For most of its history, crypto traded as a single story. Bitcoin was digital gold. Ether was a wager on blockchain adoption. Smaller tokens were higher-risk versions of applications built on decentralized rails. What was typically missing was a clear answer to a basic investor question: how does value generated by a blockchain business accrue to token holders?
Hyperliquid offers one answer. The platform is a fast-growing on-chain derivatives exchange and one of the most profitable venues in crypto trading. Its HYPE token benefits from a fee-funded buyback mechanism, where higher trading volumes can produce more revenue and, in turn, more open-market token purchases. That creates a direct link between activity on the exchange and demand for the asset.
“Traditional investors who care about cash flows are finding HYPE to be a much easier story to understand, and far easier to underwrite as a long investment,” said Jeff Dorman, chief investment officer at Arca.
The appeal comes after one of the most punishing stretches in crypto history for speculative tokens. Bitcoin, trading at about $67,000, is down almost 50% from its October record high. Thousands of altcoins that once traded on hype, celebrity endorsements and online momentum have either collapsed or faded into irrelevance, leaving investors more focused on whether a project can generate revenue, attract users and create value beyond rising token prices.
Some investors see parallels with the evolution of internet companies after the dotcom bust.
“There are some parallels for digital assets with the dotcom boom, where in the initial excitement of the internet almost any startup in the sector was able to attract investor capital,” said Stephen Coltman, head of macro at 21Shares, which offers THYP, a Hyperliquid ETF that launched in May. “But then there was a bust where most of these new businesses failed and it was only gradually over the subsequent years that the winners in each market segment emerged.”
The rally also reflects growing interest in crypto projects that generate revenue and use some of it to buy back tokens. That appeal has grown as Hyperliquid pushes beyond its core derivatives business into tokenized real-world assets, pre-IPO markets and prediction-style contracts. Nearly a third of trading activity on the platform now comes from tokenized real-world assets, according to Hyperscreener.
Timothy Misir, head of research at BRN, said the ETF listings have added a new category of buyers. Before the funds launched, demand for HYPE came largely from crypto traders and investors already active in the ecosystem. The ETFs allow traditional investors to bet on Hyperliquid’s growth without managing digital wallets or trading directly on crypto platforms, he said.
That matters because Hyperliquid’s business model is designed to create its own source of demand. DefiLlama data show that almost all fees generated by Hyperliquid’s spot and perpetual trading markets are used for token buybacks, excluding some builder and unit fees. Hyperliquid accounts for more than a third of the total revenue distributed to token holders across 855 protocols tracked by DefiLlama.
The arrangement has invited comparisons with stock buybacks. Unlike shareholders, token holders have no direct claim on profits. As such, it is difficult to separate those fundamentals entirely from momentum. Hyperliquid’s volumes and revenue from crypto-token trading have begun to soften, making the platform more dependent on real-world assets for growth. That may prove less defensible as traditional finance firms move toward round-the-clock trading and perpetual futures.
There is also regulatory pressure. Bloomberg earlier reported that CME Group and Intercontinental Exchange have urged officials to regulate Hyperliquid. Any punitive action could slow the platform’s growth or dampen investor enthusiasm.
Investors must also watch for flow exhaustion after the initial ETF launch, valuation compression if growth slows, and market-structure risks tied to liquidations, Misir said. Expanding into tokenized equities, commodities, S&P 500 derivatives and prediction markets may also create a larger regulatory target than crypto-only perpetuals. US users are prohibited from using Hyperliquid.
For now, HYPE’s rise suggests investors are willing to pay for a clearer link between economic activity and token value. Whether investors have discovered a more durable way to value crypto, or simply a more sophisticated form of momentum, remains an open question.
“Crypto is starting to differentiate based on economics, not just narrative,” said Ryan Rasmussen, head of research at Bitwise. “Hyperliquid is one of the first ‘Gen 2’ crypto tokens, where economic activity on the platform accrues directly to the token. Investors are rewarding this.”
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