Don't Buy Hyperliquid If This Happens
Key Points
With interest in crypto perpetual futures soaring, so is the price of the Hyperliquid token (HYPE).
Prediction market platforms Kalshi and Polymarket are looking to enter the perpetual futures market.
The line between prediction markets and derivatives markets is blurring, creating uncertainty for Hyperliquid investors.
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Right now, traders can use prediction markets to bet on crypto prices. However, traders must specify an end date for any event contract. In other words, you can bet on Bitcoin (CRYPTO: BTC), but you'll have to specify that it will hit a certain price by the end of a certain time period (e.g., the end of 2026). You can't just keep an event contract open in perpetuity.
But that could change soon. Prediction markets such as Kalshi and Polymarket want a piece of the booming perpetual futures market, which could have huge consequences for market leader Hyperliquid (CRYPTO: HYPE). If perpetual futures contracts are available on popular prediction market platforms, the price of Hyperliquid could soon come under extreme pressure.
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Hyperliquid and the boom in perpetual futures
Hyperliquid is a decentralized exchange for trading crypto assets. The most risky and speculative trading on Hyperliquid involves perpetual futures, or "perps" for short. These are simply futures contracts without expiration dates.
Image source: Getty Images.
With perpetual futures, massive leverage (up to 100x) is possible, and liquidations of trader positions can lead to massive one-day price spikes.
As a result, it's easy to see why regulators have been cautious about opening up this risky corner of the crypto market to U.S. investors. That has given Hyperliquid an early first-mover advantage.
The soaring price of Hyperliquid over the past 18 months can be traced back to its ability to offer easy, convenient perpetual futures trading to crypto traders based outside of the U.S. Hyperliquid is the dominant global player and reportedly accounts for 70% or more of all perpetual futures trading.
That type of market dominance has shown up in the price of Hyperliquid. The HYPE token is up 62% in 2026 and a remarkable 1,127% since its launch in November 2024. Hyperliquid now ranks as the 10th-largest cryptocurrency, with a $10 billion market cap.
Hyperliquid vs. prediction markets
Given Hyperliquid's meteoric rise, it's easy to see why other players want to get in on the action. Both Kalshi and Polymarket have reportedly applied to the Commodity Futures Trading Commission (CFTC), which regulates the prediction market business, for the ability to offer "perps"-style event contracts.
And it's not just prediction market platforms that want to offer perps. Coinbase Global is also seeking to enter the retail perpetual futures market. As a result, a blurring of the lines is now occurring between prediction market trading and derivatives market trading.
And that's what has me worried right now. Hyperliquid may soon no longer have a protective economic moat to keep out competitors. Given the pro-crypto leanings of the Trump administration, it's almost certain that the "perps" market will become much more competitive.
If that's the case, I want no part of Hyperliquid. It will be hard to believe the HYPE if well-funded, U.S.-regulated competitors enter the fray. It's been fun while it lasted, but I can't see Hyperliquid outperforming the crypto market for too much longer.
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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Hyperliquid. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.
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