Alright, enough chit-chat, let’s dive into Hyperliquid and its HYPE token. $11.44 billion in DEX volume for June. Five times the TVL since April, reaching $1.8 billion. HYPE token is currently up 7% in the last 24 hours, and 15% in the last week, sitting at $40.56. Sounds amazing, right? Almost too good to be true. And that's precisely why I'm skeptical.

$11B Volume: Organic or Orchestrated?

We have all seen these stories play out over and over again. A new DEX comes out, a new token is released, volume goes up and everyone yells “bull market! So to put it bluntly, here’s what’s going on. We should be asking how much of that volume is true user activity versus wash trading, bot activity or strategically incentivized activity. It’s not hard to juice the stats when you’re passing out the free cocktails.

Hyperliquid's impressive volume surge mirrors, in some ways, the early days of ICOs. Recall those early promises, that initial hype, those promised sky-high returns? We all know how that mostly ended. While Hyperliquid is a functioning DEX and not a vaporware project, the underlying principle is the same: attract capital with the promise of outsized gains. Or, can they truly be trusted to provide long-term, sustainable value? Or is this truly the beginning of something much more profound that goes beyond speculative hype.

A new 7% price jump and being close to all-time highs might be setting a bull trap. You know that nasty 25% drop that started right after June 18th? That’s the sort of whipsaw queuing volatility you can and should expect in these modes. It's not a sign of a healthy, growing ecosystem; it's a sign of market manipulation and thin liquidity.

Beyond the Numbers: A Deeper Dive

Numbers don't tell the full story. Beyond that, though, we need to consider who these users are. Who are they? Are they passionate evangelists for the Hyperliquid ecosystem? Or are they just yield farmers following the craze? Despite the more benign name localization, mercenary capital drives 90 percent of trading volume. Once these incentives go away, the HYPE token will crash, both in terms of total volume and total price.

Consider for a moment the parallels to the art world.… a painting sells for millions, and that generates excitement, and generates more buyers wanting in on the action, pushing their prices even higher. What if the market someday comes to see that the painting’s intrinsic value doesn’t come close to justifying the price tag? The bubble bursts. I’m not trying to say that HYPE is worthless, but its current valuation should be examined under a microscope.

And of course, there are the usual risks associated with any DeFi platform. Smart contract vulnerabilities, regulatory uncertainty, and the concentration of liquidity in too few hands are all serious threats. Any one of these black swans in waiting could destroy the value of the investment you made yesterday. Are you truly prepared for that possibility?

HYPE's Rally: Hot Air or Sustainable?

So, is HYPE's recent rally sustainable? I'm leaning towards hot air. Though Hyperliquid’s volume and TVL growth is quite impressive, it should be taken with a grain of suspicion. That 7% increase and 15% weekly gain — noise, not signal.

Here's the thing: I'm not saying Hyperliquid is a scam or that HYPE is destined to fail. We encourage you to spend some time researching on your own. Here’s what to know about the risks before you dive in headfirst. Don't let FOMO cloud your judgment. Don't be fooled by shiny numbers.

  • Ask yourself:
    • What is the long-term vision for Hyperliquid?
    • How is it different from other DEXs?
    • What are the potential risks?
    • What is the HYPE token's utility?

If you can't answer these questions with confidence, then you probably shouldn't be investing in HYPE.

The future of HYPE is dependent on Hyperliquid developing a sustainable ecosystem. They need real users and real value. Until then, I’ll be rooting for them from the cheap seats with a big tub of popcorn in hand. I, for one, hope this rocket ship doesn’t crash and burn and instead takes us to the moon! Frankly, I'm not holding my breath.