Why is HYPE not a good investment target right now?

Written by: Dave

Abstract

HYPE has implemented a robust buyback mechanism (approximately $1.3 billion to date, accounting for about 46% of the total token buyback planned for 2025) and has strong income support. Almost all researchers are optimistic about this token, but today I want to take a contrary view: several structural and macro factors make HYPE a less “sweet” deal.

1. Buyback VS Unlock

Buybacks have always been the main mechanism supporting HYPE prices, and many KOLs have mentioned this. However, future token unlocks should not be overlooked either.

Starting from November 29, 2025, 373 million HYPE (approximately 37% of total supply) will be unlocked, with about 215,000 HYPE unlocked daily, over a period of 24 months. At current prices, this will create a potential supply pressure of about $200 million per month.

In comparison, the total buyback amount for the entire year of 2025 is $644.64 million, averaging about $65.5 million per month, with buyback funds sourced from 97% of transaction fees. Daily buybacks can only cover 25-30% of the daily unlock volume. Even if revenue continues to grow strongly, the buyback capacity will struggle to absorb such a large scale of unlocks, inevitably leading to price compression.

2. Market Cycle Risk & Valuation Vulnerability

Currently, almost all valuations of HYPE (including the widely cited P/E, which is actually based on the ttm calculation model) are based on strong data from the past few months, during a bull market. However, as someone who has experienced the bear market of 2022, I believe that macro cycle factors are a key variable that must be considered. At least in the foreseeable future, the probability of a bear market is not lower than that of a bull market, and both the core assumptions and indicators are being challenged.

2.1 Current Status Overview

The current income indicators are indeed performing strongly:

·Annual income: 1.2 billion USD

·Fully Diluted Valuation (FDV): 31.6 billion USD

·Circulating Supply: 20 billion USD (Data source: Defillama)

· TTM PE is approximately 16.67

·Monthly compound revenue growth from December 2024 to August 2025 is +11.8 %

These data seem attractive compared to most US stock companies, but the problem lies here - in the upcoming bear market, HYPE may face a more severe Davis Double Whammy situation than other projects.

2.2 Bear Market Scenario and Davis Double Kill

From the backtest, the correlation coefficient between perpetual contract trading volume and BTC price is > 0.8 (across cycles).

·2022 Bear Market: Perpetual contract trading volume fell by 70% compared to the peak in 2021.

·Revenue dependence: 91% comes from trading fees, highly susceptible to trading volume fluctuations.

· Withdrawal Delay: HLP vault requires a 4-day lockup, centralized exchange withdrawals take 24-48 hours.

This is the classic Davis Double Kill structure: cryptocurrency asset prices decline → trading volume & transaction fees decrease, while valuation multiples contract → forming a vicious cycle.

The valuation of $HYPE is mostly based on the performance during the bull market of the past year. However, in the Web3 space, revenue is highly cyclical. We should also adjust our fundamental assumptions accordingly.

Unlike the US stock market, the S&P 500 can be seen as having a smooth growth trend since 2008 when viewed over a longer period. However, the cryptocurrency market still exhibits characteristics of boom and bust cycles. While macro market factors are indeed difficult to quantify, being able to grasp this cyclicality is what distinguishes excellent traders from top traders within the industry.

2.3 Encrypted Native Indicators

We know that even in traditional finance, the price-to-earnings ratio (PE) is not the only metric; there are also others like EV/EBITDA, P/FCF, and ROIC. For HYPE, some other important indicators also need to be taken into consideration. These include:

TVL: 4.3 billion USD, but shows a significant downward trend compared to the peak of 6.1 billion USD on 2025.09.

P/TVL: 2.0 (Solana 1.5).

Market share: Market share has dropped from a peak of 80% to 70%, credit to dark horse Aster. Of course, there are also lighter edgex and a bunch of others.

3, idiot Dave fud HYPE? It's not that absolute either.

Although I currently do not agree with investing in HYPE, my bearish stance only applies to a mid-term perspective. If we look at a long-term investment cycle of 2-5 years, HYPE is absolutely worth investing in. This needs no further explanation.

A complete investment decision depends on various factors, including position size, drawdown tolerance, and investment objectives, among others.

All projects are under pressure in a bear market. What is the way out?

Prediction markets may currently offer better cost-effectiveness. @a16z research states that the correlation between prediction markets and the main market is only 0.2‑0.4, compared to $HYPE 's > 0.8.

In addition, 2026 will see several highly anticipated events, such as the World Cup (the last for many veterans like Messi and Ronaldo), the US midterm elections, the Winter Olympics, and the League of Legends World Championship, among others. There will also be a considerable number of game, movie, and anime releases, such as GTA6. It can be anticipated that this will be a big year for gambling. A significant amount of off-market funds may flow into this sector, which could impact the NASDAQ. If all goes according to plan, prediction market-related projects are worth paying attention to.

Conclusion:

From a medium-term perspective, the risks of large-scale unlocks, periodic income, and changes in the macro market environment outweigh the returns brought by the current valuation. This article does not constitute any investment advice, and all investments carry risks. NFA, DYOR.