Hyperliquid’s token is tanking as ETF investors flee, so why does Grayscale think it is massively undervalued?

Grayscale Investments has launched the Grayscale Hyperliquid Staking ETF as part of a broader institutional push to package exposure to Hyperliquid's HYPE token into regulated fund vehicles. The fund carries the lowest gross fee among U.S. Hyperliquid ETPs, positioning it as the most cost-efficient pathway for institutional investors seeking HYPE exposure while simultaneously earning potential staking rewards. This launch reflects growing asset manager competition to distribute crypto derivatives exposure as regulatory clarity improves around decentralized finance platforms.

However, the HYPE token's performance has contradicted bullish institutional positioning. The token has depreciated approximately 22% from recent highs and currently trades around $46, driven by investor reassessment and outflows from ETF vehicles. This divergence between institutional optimism and market pricing has created a notable tension in the market narrative surrounding Hyperliquid's valuation and growth trajectory.

Grayscale's investment thesis centers on Hyperliquid's revenue generation and market positioning. The platform generated approximately $800 million in trading fees last year, with current annualized revenue running at $1.251 billion according to DefiLlama data. Grayscale projects the platform will achieve $1 billion in annual revenue by 2027, arguing the HYPE token remains undervalued relative to traditional fintech and digital assets peers. The asset manager views Hyperliquid as a "purest expression" of exposure to perpetual futures, tokenization, and stablecoins simultaneously.

Hyperliquid's operational model reinforces its economics. As a decentralized perpetual futures exchange built on the HyperEVM layer-1 blockchain architecture, the platform delivers 24/7 trading, deep order books, and fast execution while maintaining DeFi principles of transparency and self-custody. The platform's permissionless innovation framework allows third-party builders to deploy new markets beyond perpetual futures, expanding into crypto spot trading, traditional asset derivatives, and outcome markets. Notably, Hyperliquid raised no venture capital and distributed approximately 30% of HYPE token supply directly to users, creating strong community alignment.

The regulatory environment presents both risk and opportunity. Hyperliquid remains unavailable to U.S. users due to regulatory ambiguity surrounding perpetual futures and decentralized exchanges. However, recent regulatory commentary and ongoing Congressional efforts signal potential clarity that could unlock meaningful U.S. market access and serve as a growth catalyst. Whether HYPE's current depressed valuation reflects justified skepticism regarding regulatory resolution or represents a genuine mispricing relative to Grayscale's $1 billion revenue thesis remains a key debate among institutional investors evaluating crypto derivatives exposure.