Hyperliquid Is Offering Pre-IPO Trading for SpaceX. Is HYPE Still a Buy at $60?

SpaceX is reportedly targeting an initial public offering (IPO) of $1.8 trillion, which could make it the largest public debut in history. Most investors are not able to get exposure even if they want it. But a decentralized crypto exchange (DEX) called Hyperliquid (CRYPTO: HYPE) just changed the game by launching a synthetic derivative contract that tracks SpaceX's implied share price, with no brokerage account or investor accreditation required.

The price of the coin rose by 7% in the 24 hours after the SpaceX contract went live on May 18. Hyperliquid's tokenomics are wired so that platform activity feeds directly into value for coinholders, which means that if the contracts are a success, its holders will benefit even if they never buy a single one. That's part of the argument for why it might be worth buying Hyperliquid. But is it still an attractive purchase at its current price, near $60?

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This chain knows how to build hype

The SpaceX asset, trading with the ticker SPCX-USDC on Hyperliquid, is a synthetic perpetual futures contract built using Hyperliquid's HIP-3 framework.

In English, a synthetic perpetual, or a "perp" for short, is a financial derivative that tracks the price of an asset without owning it, and security never expires as an option contract does. If the contract is linked to a stock that goes up for one year straight, the value of the contract goes up for that same duration, and the reverse is also true.

The SpaceX contract doesn't confer any ownership of real pre-IPO shares of the company, though, do. It's just a financial artifice intended for short-term trading that mimics exposure to the price action of actual SpaceX shares in the lead up to its IPO. My advice: Don't buy it.

The fact that this artifice was made on Hyperliquid's platform rather than somewhere else, generating $7.1 million in trading volume on May 19 alone, suggests the network is on the cutting edge, and that it knows how to attract users and capital. That's important because Hyperliquid's design rewards holders directly for the activity that traders create when they trade perps. The protocol routes roughly 99% of trading fees into its Assistance Fund, which conducts open-market buybacks of HYPE; the purchased tokens are then burned, permanently removing them from circulation. More contracts changing hands means more fees and more buyback pressure on the supply of HYPE, which boosts its price over time.

On that note, the coin is up by 120% over the last 12 months as of May 21).

This coin could easily keep growing from here

Now, let's think about whether this coin is still worth buying despite its sharp run-up.

Hyperliquid's market cap is more than $13 billion today, so it isn't so prohibitively large that further growth would be difficult. In the 30-day period ended May 19, it generated nearly $57 million in fees, in large part due to handling $177 billion in perpetual futures contract trading volume. Its base of fees, while healthy, isn't trending strongly upward so far, but that isn't a major problem from an investment perspective because incurring any fees results in HYPE getting repurchased and burned.

In terms of its opportunities for growth, it recently launched native decentralized prediction markets, enabling it to compete for market share that's currently held by players like Kalshi and Polymarket. It's also seeing hundreds of millions of dollars in trading volume each day with its tokenized commodity contracts tracking assets like oil, gold, silver, and natural gas; it's a favorable alternative to traditional commodity markets because Hyperliquid's tokenized commodities trade 24/7. So the odds are very good that Hyperliquid is competing in enough of the right places and with enough of the right set of capabilities to continue to grow.

But competition is likely to prevent this coin from appreciating in the near term. There are many other crypto venues for trading perpetual futures, and traditional financial businesses are entering the market as well.

In light of all of the above, Hyperliquid is probably worth buying today at $60 if you're willing to hold it for a few years and are comfortable with taking on a fairly large amount of risk and volatility. Its results so far have been impressive, and it has a decent chance of keeping the party going, but there's simply no way to consider this coin as being a tried and tested contender when it's a rising star.

Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hyperliquid. The Motley Fool has a disclosure policy.