Is This Cryptocurrency a Millionaire-Maker, Or Is the Hype Overdone?

If you're looking for an outlier in the crypto market, look no further than Hyperliquid (CRYPTO: HYPE). Amid a sea of red for top cryptocurrencies, the HYPE token is up a head-spinning 104% year to date. Since its launch back in November 2024, HYPE is up more than 1,500%.

On the surface, Hyperliquid appears to have all the signs of a millionaire-maker cryptocurrency. Assuming it can maintain its current breakneck rate of growth, it could conceivably turn a $10,000 investment into $1 million within the next seven years. But just how likely is that scenario?

Signs of trouble on the horizon

I'm not entirely convinced that Hyperliquid is the slam-dunk investment everyone else seems to think it is. Since hitting an all-time high of $76.85 in mid-June, Hyperliquid is now down 32%.

Image source: Getty Images.

A big reason for that is the rise of new competitors, all of them hoping to win market share away from Hyperliquid in the trading of perpetual futures (also known as "perps"). These are a highly speculative type of financial derivative that enable crypto traders to bet on the future prices of top cryptocurrencies, all without owning the underlying crypto. And it's possible to do so with leverage and no expiration date, which is why they are so attractive to risk-seeking crypto traders.

For nearly two years, Hyperliquid has been a dominant player in the trading of these contracts. But now that market-leading position is very much in question. On May 29, the U.S. Commodity Futures Trading Commission (CFTC) approved the first regulated cryptocurrency perpetual futures for U.S. customers. That's a real game changer.

As a result, these perps are now available to trade on the popular Kalshi prediction market platform. Kalshi currently lists perps for more than a dozen different cryptocurrencies (including Hyperliquid). And it's not just Kalshi that wants in on the action: Coinbase Global and Robinhood Markets also are moving into perpetual futures, now that they have finally cleared U.S. regulatory approval.

That potentially represents a huge competitive threat to Hyperliquid, and is a big reason why I'm concerned. As of yet, Hyperliquid has still not received approval from U.S. regulators, so U.S. investors are blocked from using its trading platform. If you try to do so, you will receive a red warning message.

A blurring of the lines for crypto trading

Over time, I'm expecting a further blurring of the lines between retail trading platforms (such as Robinhood), centralized exchanges (such as Coinbase), decentralized exchanges (such as Hyperliquid), and prediction market platforms (such as Kalshi).

That's going to have a direct impact on Hyperliquid's future expected growth rate. Can it still grow at 100% per year? Perhaps. But I'm not counting on it, and that's why I think the hype about HYPE might be overblown. As a result, I'm looking elsewhere for a millionaire-maker cryptocurrency.

Dominic Basulto has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hyperliquid. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.