Hyperliquid ETF Outflows Mount as Grayscale Sees Undervaluation

For the first time since their debut, exchange-traded funds tied to Hyperliquid's HYPE token are experiencing sustained net outflows, signaling a shift in investor sentiment. According to data from SoSoValue, more than $13 million exited the three Hyperliquid-linked ETFs in July, reversing a nine-week streak of inflows and putting the funds on track for their first negative month after attracting roughly $280 million since inception. The outflows accelerated in the second half of July, with nearly $27 million withdrawn as demand for the products cooled.

This retreat has coincided with a notable decline in the price of HYPE, Hyperliquid's native token. CryptoSlate data shows HYPE fell over 13% in July, trading near $54-about 30% below its mid-June high of $76. The token is now on pace for only its second monthly loss in 2026, even as Grayscale Research maintains that HYPE's market price does not fully reflect the protocol's underlying revenue generation and buyback activity.

Revenue, Buybacks, and Valuation Debate

The divergence between ETF investor behavior and Grayscale's valuation thesis is widening. Hyperliquid, which operates a decentralized perpetual-futures platform, surpassed $1 billion in cumulative protocol revenue less than two years after launch, according to DeFiLlama. Unlike many tokens whose value is driven by market narratives, HYPE's tokenomics are closely linked to trading activity: the protocol collects fees and uses most of that income to repurchase HYPE on the open market, theoretically supporting demand.

Grayscale has adapted the traditional earnings-per-share model to estimate "earnings per token" for HYPE, arguing that the buyback mechanism allows protocol revenue to support token value, even though HYPE does not represent equity in Hyperliquid. Grayscale projects Hyperliquid could approach $1 billion in annual revenue by 2027, with circulating supply estimates between 270 million and 310 million tokens, depending on the pace of allocations to core contributors. Based on these assumptions, Grayscale calculates forward earnings per token of $3.25 to $3.75, implying a price-to-earnings multiple of 15 to 18 at recent prices-well below the 35-40 multiples Grayscale expects for public crypto companies like Coinbase and Circle. Still, Grayscale acknowledges that HYPE holders do not have equity rights, and that the model depends on continued trading activity, ongoing buybacks, and controlled token supply.

Market Expansion and Shifting Activity

Hyperliquid's recent expansion into perpetual contracts tied to stocks, commodities, and indexes is beginning to diversify its revenue base beyond crypto trading. According to Blockworks, perpetuals linked to traditional assets generated $25.1 billion in volume between July 13 and July 19, accounting for 52% of Hyperliquid's $48.2 billion in total weekly volume. This marks the first time traditional-asset contracts have overtaken crypto-linked activity on the platform.

These synthetic contracts, deployed via the HIP-3 framework, allow third-party developers to launch new markets using Hyperliquid's infrastructure. ARK Invest's digital-assets research director Lorenzo Valente noted that Hyperliquid processed about $50 billion of the $79 billion in decentralized perpetual-futures volume during the same week, with $26 billion coming from traditional-asset-linked markets. Single-stock contracts have led this growth, recently accounting for 61% of traditional-asset activity on the platform. This shift could help Hyperliquid capture trading fees from a broader range of market participants, but it also introduces new regulatory, liquidity, and market-structure risks.

Investor Sentiment and Market Risks

Despite Hyperliquid's business expansion and protocol revenue milestones, ETF investors appear less willing to wait for Grayscale's thesis to play out. The July outflows suggest that market participants are prioritizing short-term price performance over long-term revenue-based valuation models. This disconnect between protocol fundamentals and token price is not unique to Hyperliquid; it echoes the tension seen in other crypto sectors, such as the divergence between AI data center profitability and mining losses at Core Scientific, as discussed in EgonCoin's coverage of Core Scientific's business transformation.

For now, Hyperliquid's protocol revenue and trading activity are growing faster than demand for its token among ETF investors. Whether Grayscale's valuation framework will gain traction depends on the sustainability of trading volumes, the effectiveness of buybacks, and the ability to manage token supply dilution. The expansion into traditional-asset derivatives may help diversify revenue, but it also exposes the protocol to new forms of volatility and regulatory scrutiny that could affect both trading activity and token value.

According to SoSoValue, Hyperliquid-linked ETFs saw more than $13 million in net outflows in July 2026, ending a nine-week streak of inflows. HYPE's price dropped over 13% during the same month, trading near $54, while cumulative protocol revenue surpassed $1 billion, based on DeFiLlama data. Traditional-asset perpetuals accounted for 52% of Hyperliquid's $48.2 billion in weekly trading volume between July 13 and July 19, according to Blockworks.

Unlike traditional equities, most crypto tokens-including HYPE-do not confer ownership rights or direct claims on protocol revenue. Instead, value accrual mechanisms such as buybacks, burns, or staking rewards are used to link protocol activity to token demand. These mechanisms can be effective when trading volumes are high and token supply is managed carefully, but they do not guarantee price support, especially during periods of shifting investor sentiment or increased dilution. As crypto markets mature, the debate over how to value tokens-whether based on protocol fundamentals, market narratives, or a combination of both-remains unresolved.