The cryptocurrency bear market has dragged down most major digital assets this year, but HYPE has moved in the opposite direction. So far this year, the token is up 23.9%, matching gold’s gain over the same period. The S&P 500 is slightly negative, while bitcoin is down 23.7% and ether is down more than 33%.
The divergence is notable not only because HYPE is crypto-native, but because it has decoupled from the broader digital asset market. Its performance increasingly reflects the value of the platform behind it rather than the direction of the market.
HyperLiquid, the decentralized derivatives exchange that underpins HYPE, is designed to monetize activity rather than price appreciation. In bull markets, capital tends to concentrate in spot exposure. In more turbulent conditions, marked by reductions and macroeconomic shocks, the volume of derivatives tends to persist. Traders move from buying to positioning, and the platform charges fees on both sides.
While trading volume on competing platforms Aster and Lighter has fallen in recent months, HyperLiquid’s has increased, rising from $169 billion in December to more than $200 billion in both January and February. Meanwhile, Aster went from $177 billion in December to less than $100 billion in February, and Lighter suffered an even steeper drop, DefiLlama data shows.
HyperLiquid’s total volume since its inception has reached a whopping $4 billion.
Volatility as a business model
HyperLiquid’s main product is perpetual futures, which allow traders to trade long or short positions with leverage. When prices rise, leverage amplifies the advantages. When markets fall, shorting and basing come into play. The exchange charges fees on both sides.
That structure becomes particularly relevant in a year marked by turbulence across asset classes. Instead of relying on sustained price appreciation, the stock market captures turnover. In sideways or declining markets, traders often increase frequency, hedge exposure, or rotate toward relative value strategies. Activity replaces management as the main driving force.
And that business model has produced positive results. The protocol’s gross revenue grew 96% in the third quarter of 2025 to $354 million, with the fourth quarter total reaching $286 million, the majority of which came from perpetual trading fees.
That revenue comes from a super-small team of fewer than 15 employees, half of whom focus on engineering. HyperLiquid founder Jeff Yan also rejected investment from venture capitalists to maintain independence, a bold approach rare in the crypto industry.
Trading outside market hours
More recently, HyperLiquid has expanded beyond crypto-native pairs. It now offers synthetic exposure to currencies, commodities and major stock indices. It also offers weekend trading for US stocks, an innovation that resonates with retail traders accustomed to the steady pace of cryptocurrencies.
For a generation raised on app-based brokerage platforms, the traditional market calendar seems restrictive. As seen last weekend, geopolitical escalations often occur outside the typical weekday trading window. HyperLiquid’s structure allows traders to react in real time rather than waiting for Monday’s open.
The HyperLiquid silver market has also been a runaway success with trading volume approaching $750 million during a recent 24-hour trading period despite traditional markets being closed for most of Sunday.
The exchange has also introduced pre-IPO perpetual markets tied to companies like Anthropic, OpenAI, and SpaceX. These instruments are synthetic and do not confer equity ownership, but offer directional exposure to private companies. In effect, they create a parallel venue for price discovery among retail participants who would otherwise be excluded from late-stage company valuations.
The product FTX tried to build
The model has echoes of a previous vision. FTX launched 24-hour trading, tokenized stocks, and seamless leverage across all asset classes. Its collapse was due to custody risk, poor balance sheet practices and the commingling of funds.
HyperLiquid operates on a non-custodial framework, with on-chain settlement and transparent vault mechanics. Users interact with smart contracts instead of depositing funds to the balance sheet of a centralized entity. In a post-FTX landscape, that distinction has weight. Retail traders who absorbed losses from centralized failures remain sensitive to counterparty exposure.
HyperLiquid offers many of the features once marketed by FTX, but through an infrastructure designed to reduce reliance on a single custodian.
The exchange also leans towards competition and gamification. Leaderboards prominently rank traders by performance, creating protagonists like James Wynn, who lost $100 million on HyperLiquid after engaging in a long-term high-risk trading strategy using leverage when bitcoin was above $100,000.
The mechanic encourages commitment. Traders can build reputations through short positions, market-neutral strategies or well-timed directional bets, and that generates buzz on social media, effectively acting as a marketing vehicle even in volatile markets.
The test of centralization
Claims that HyperLiquid is insulated from bear markets require context. A year ago, the protocol faced a credibility shock that raised questions about decentralization.
In April 2025, the total value locked in the Hyperliquidity Provider vault fell from $540 million to $150 million in one month. The trigger was a trading episode involving a token called JELLY. A trader opened a large short position in HyperLiquid and at the same time purchased the token on illiquid decentralized exchanges. Low liquidity distorted prices and forced the vault into a toxic position through liquidation.
As the reported price of JELLY soared to levels that were not supported by deep liquidity, the vault’s unrealized losses increased. HyperLiquid intervened, forcibly closing the market and setting JELLY at $0.0095 instead of the roughly $0.50 price conveyed by the oracles. The decision protected the vault from substantial losses, but sparked a backlash.
Critics argued that a protocol marketed as decentralized had exercised discretionary control reminiscent of a centralized exchange. Governance optics deteriorated rapidly. Vault performance dropped drastically and users withdrew capital.
Security researchers described the episode as an economic design flaw rather than a smart contract exploit. Oak Security’s Jan Philipp Fritsche characterized it as an unpriced vega risk, where leveraged exposure to volatile assets depleted the risk pool in a predictable manner. The episode highlighted that economic vulnerabilities can be as destabilizing as technical errors.
HyperLiquid subsequently modified its governance process, changing asset delisting to an on-chain validator voting mechanism. The change did not eliminate scrutiny, but it addressed one of the central criticisms.
The vault has since recovered to $380 million in TVL, offering users an APR of 6.93%.
Resilience through activity
Despite the controversy, trading volume on the exchange remained strong and, with competitors Aster and Lighter losing momentum, HyperLiquid is positioning itself as a mainstay in the current cryptocurrency bear market.
The risks remain. Regulatory attention could intensify around synthetic exposure to private companies and US stocks. The fragmentation of liquidity in smaller markets could re-emerge price distortions. Governance mechanisms will continue to be tested under strain.
However, HYPE’s relative strength this year reflects a structural distinction. Instead of functioning as a high-beta bet on the appreciation of digital assets, it increasingly behaves like a claim on a place that monetizes volatility.
In a cycle defined less by sustained rallies and more by sudden changes, that positioning has been important.
