Grayscale Defends Undervalued HYPE Amid ETF Outflows and July Demand Reversal

Woofun AI reports that a sharp divergence has emerged between institutional valuation theses and market sentiment for Hyperliquid, as ETF investors flee while Grayscale maintains that the HYPE token remains significantly undervalued.

The reversal in demand during the second half of July triggered nearly $27 million in outflows, effectively ending a nine-week streak of consecutive inflows.

This shift positions HYPE for only its second losing month this year, contrasting with the earlier period of sustained capital accumulation.

Structurally, Hyperliquid operates as a decentralized perpetual-futures platform that generates fees and utilizes most of that income to repurchase HYPE, linking trading activity directly to token demand. SoSoValue data shows Grayscale projects annual revenue could approach $1 billion by 2027, driven by crypto trading recovery and stablecoin infrastructure, with circulating supply estimated between 270 million and 310 million tokens depending on allocations to core contributors. These assumptions yield estimated earnings per token of $3.25 to $3.75, implying a trading multiple of 15 to 18 times projected earnings, which the firm deems cheap.

However, Valente notes that HYPE holders do not own shares in Hyperliquid, meaning protocol revenue does not accrue to them like corporate earnings, and the valuation relies on sustained trading activity, continued buybacks, and controlled supply. While Hyperliquid’s volume exceeded that of all other decentralized exchanges combined, the expansion into traditional-asset derivatives introduces regulatory, liquidity, and market-structure risks that were less prominent when the platform focused solely on crypto.

Ultimately, the platform’s business expansion is outpacing investor patience, creating a gap between fundamental growth and market appetite. July’s ETF outflows indicate that fund investors are increasingly unwilling to wait for the long-term thesis to materialize.