HyperLiquid in a Bear Market: How the Exchange Profits from Volatility and Why HYPE Rises While Bitcoin Falls
The cryptocurrency market has been under pressure this year. Bitcoin has declined by about 23.7%, ether has lost more than 33%, and the S&P 500 shows a slight pullback. Against this backdrop, the HYPE token is moving in the opposite direction up 23.9% since the beginning of the year, nearly in line with gold. Time for Action analyzed why an asset linked to the crypto sector has diverged from the broader market trend.
HYPE is not a traditional coin reflecting expectations of overall crypto growth. Its price is increasingly correlated with the performance of the HyperLiquid exchange that supports it. This is a decentralized derivatives platform built on monetizing activity rather than market direction. The exchange’s core product is perpetual futures. These allow traders to open long or short positions using leverage. When markets rise, participants profit from longs. When they fall, they profit from shorts. In both cases, the exchange collects fees. In turbulent conditions, traders open and close positions more frequently, hedge risks, or shift to relative value strategies. For the platform, this translates into higher turnover.
HyperLiquid’s monthly trading volume has exceeded $200 billion, while competitors Aster and Lighter have seen declines. Total cumulative volume since launch has reached $4 trillion. In the third quarter of 2025, gross protocol revenue increased by 96% to $354 million, and in the fourth quarter reached $286 million, largely driven by perpetual trading fees. These figures are generated by a team of fewer than 15 people, half of whom focus on engineering. Founder Jeff Yan rejected venture capital funding to preserve operational independence.
HyperLiquid has expanded beyond crypto pairs. The platform offers synthetic exposure to foreign exchange, commodities, and major stock indices. A notable feature is weekend trading of US equities. This appeals to retail traders accustomed to the 24/7 rhythm of crypto markets. During geopolitical escalations that occur outside traditional market hours, this structure allows immediate reaction rather than waiting for Monday’s open. The exchange also introduced perpetual markets tied to private companies ahead of IPOs, including Anthropic, OpenAI, and SpaceX. These instruments do not grant ownership rights but provide directional exposure to company valuations. Effectively, they create a parallel price discovery venue for retail participants who would otherwise be excluded from late-stage venture valuations.
The model partially echoes the early vision of FTX, which offered tokenized stocks and round-the-clock trading. However, HyperLiquid operates on a non-custodial basis with on-chain settlement and interaction through smart contracts. In the post-FTX environment, reduced counterparty risk has become a critical factor for retail traders.
Governance questions, however, remain sensitive. In April 2025, an incident involving the token JELLY led to a sharp drop in total value locked in the liquidity vault from $540 million to $150 million. A trader opened a large short position while simultaneously buying the token on illiquid decentralized exchanges, distorting price feeds. The platform intervened by force-closing the market and setting a settlement price below oracle levels. The move limited vault losses but triggered criticism regarding decentralization. Subsequently, the asset delisting process was shifted to validator voting. The vault has since recovered to $380 million in TVL and offers a 6.93% annual yield.
Risks remain. Regulatory scrutiny may increase due to synthetic exposure to US equities and private companies. Liquidity fragmentation in thinner markets could lead to price distortions. Governance mechanisms will continue to be tested under stress conditions. At the same time, HYPE’s relative strength reflects a structural distinction. The token behaves less like a high-beta bet on overall crypto appreciation and more like exposure to a platform that monetizes volatility. In a cycle defined more by sharp swings than sustained rallies, this positioning has proven effective.
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