Stack Articles

Hyperliquid is Still Cheap versus its Fintech Peers

Hyperliquid, the breakout success story in perpetual futures, is not a traditional business and does not issue shares. However, trading activity on the platform accrues value to the HYPE token and, like many other crypto assets, the token can be valued with cash flows. On that basis, we think it looks cheap.

Traditional equities can be valued based on earnings per share (EPS). Blockchain protocols like Hyperliquid can be valued based on “earnings per token” (EPT).

For earnings, we assume the platform will make ~$1bn in 2027, up ~20% from 2025 on the back of an expected recovery in crypto trading volume and a new stablecoin partnership.1

The supply of HYPE tokens is dynamic and depends on network activity. Staking emissions and contributor unlocks (i.e., vesting) add to HYPE supply, while fee burns reduce HYPE supply. There are currently about 270 million HYPE tokens in circulation. We project that circulating supply will total between 270 and 310 million tokens by the end of 2027, based on our baseline expectations for earnings and a range of assumptions for team unlocks.2

Together these estimates equate to roughly $3.25 to $3.75 in EPT, and, at the current HYPE price of $54, a forward “earnings multiple” for HYPE of roughly 15 to 18x, suggesting the token may be undervalued compared to fintech equities (Exhibit 1). Risks to our forecasts include lower than expected network revenue growth and/or higher than expected token supply growth.

Key Takeaway: Despite the gains in Hyperliquid’s HYPE token this year, it still looks cheap compared to fintech equities.

Exhibit 1: HYPE multiple can be compared to traditional fintechs

1. A portion of stablecoin reserve income will be directed to the protocol under Hyperliquid’s Aligned Quote Asset version 2 (AQAv2) infrastructure. The median public equity in Exhibit 1 is expected to grow earnings by ~80% between 2025 and 2027, based on Bloomberg consensus earnings estimates.

2. Hyperliquid core contributors have been unlocking HYPE tokens at a rate of ~550k per month. We assume a range of 550k (the current run rate) to 2,750k (5x the current run rate) in our projected supply estimates. Estimated emissions are based on current staked HYPE supply and the current staking reward rate.

CLARITY Act Coming Down to the Wire

The CLARITY Act, bipartisan legislation creating a comprehensive rulebook for crypto capital markets, is coming down to the wire. The bill needs to clear the US Senate in the next two weeks (before the August recess), or it will likely get drowned out by midterm election politics.

On July 22, Senate Republicans released a complete draft text for the bill for the first time.1 Grayscale supports passage of the CLARITY Act and believes it will create a solid legal foundation for software developers, token issuers, investors, and other market participants, helping drive growth of public blockchain adoption.

The key sticking point is around the so-called “ethics” provisions—limits on public officials from issuing or sponsoring digital assets while in office. The Republican draft includes those limits but press reports suggest Democrats would like to see revisions.

Other key elements of the bill are less contentious. The legislation includes protections for non-custodial software developers—key for ensuring continued growth in decentralized finance (DeFi)—as well as rigorous requirements around KYC/AML and other protections against illicit finance.

Prediction markets put the probability of passage close to a toss-up (Exhibit 1). If the bill does not become law, public blockchain technology will continue to make inroads into the mainstream financial system, in our view, with use cases like stablecoins and tokenized assets. But investors and developers would need to continue to rely on guidance from regulatory agencies, without the long-term certainty offered by legislation.

Key Takeaway: The CLARITY Act may soon clear the Senate if bipartisan negotiators can make progress on a few remaining issues. The bill would create long-term regulatory certainty for crypto investors, developers and market participants and help drive the adoption of public blockchain technology.

Exhibit 1: Prediction markets suggest passage of CLARITY Act is a close call

The bill includes elements from both the Senate Banking Committee and the Senate Agricultural Committee. The new draft text combines material from both.

Bitcoin: Four-Year Cycle or Macro Asset?

When will the Bitcoin bear market end? Among market participants, there are two common perspectives.

Believers in the “four-year cycle” theory see Bitcoin halving events as the key driver of price movements and expect the current bear market to play out like those in the past. Historically, Bitcoin’s price has bottomed about a year after the cyclical peak and roughly 2.5 years after the halving event. Cumulative drawdowns have averaged ~80%.1 The four-year cycle theory implies that Bitcoin’s price could fall further, with a bottom in September or October.

The alternative perspective is that Bitcoin has “grown up” as an asset, and its price will henceforth be influenced by shifts in the macro backdrop, like virtually all major asset classes. For example, Bitcoin bear markets in the past have corresponded with slowing economic growth and/or rising real interest rates (Exhibit 1). The current bear market has also featured a major shift in Fed policy expectations and rising real interest rates. Naturally, if macro factors are in the driver’s seat, Bitcoin’s price could bottom when these macro factors turn around.

We subscribe to the latter view. If the Fed forgoes rate hikes and economic growth holds up well, Bitcoin’s price may already have bottomed.

Key Takeaway: The “four-year cycle” view predicts lower lows for Bitcoin’s price, but a macro perspective suggests the bottom may already be in.

Exhibit 1: Bitcoin price cycles have corresponded to shifts in macro backdrop

Based on median magnitude and duration of past drawdowns. Source: Coin Metrics, Grayscale Investments. Data as of July 21, 2026.

Earning Bitcoin Option Income in the Range

Although we see some positive signs, we can’t be sure exactly how the latest Bitcoin (BTC) bear market will play out. If Bitcoin’s price has found a durable bottom but trades sideways before recovering, covered call strategies can offer a way to help generate income from Bitcoin’s volatility while managing exposure to spot prices. As a reminder, in a covered call strategy, an investor buys a spot position and then sells a call option against it, earning the premium.

For example, a hypothetical covered call strategy1 for end-2026 with a spot Bitcoin price of $65,000 and implied volatility of 40% would offer:

An annualized yield of roughly 22%…

Positive returns above a breakeven price of $58,500…

And higher returns than spot BTC up to $72,500.

In other words, in this scenario an investor would earn ~22% annualized if Bitcoin’s price remains unchanged, and positive returns if Bitcoin’s price is above ~$58,500 at expiry (Exhibit 1). The option premium provides income as well as downside protection, in exchange for ceding some upside if Bitcoin rallies sharply. If the spot price of Bitcoin falls below the breakeven price, the covered call strategy loses money, but less than an outright long (by an amount equal to the premium on the call).

This simple example includes just spot BTC and a single call option. Many Bitcoin covered call strategy ETFs are designed to produce similar outcomes by selling a rolling portfolio of BTC call options.

Key Takeaway: Bitcoin covered call strategies can offer attractive 20%+ annualized yields at current prices and offer a compelling risk/reward provided the price of Bitcoin stays in a range.

Exhibit 1: Covered call strategies can outperform if spot Bitcoin prices stay in a range

Options involve risk and are not suitable for all investors. For information on the uses and risks of options, you can obtain a copy of the Options Clearing Corporation risk disclosure document titled Characteristics and Risks of Standardized Options by clicking here.

1. A covered call strategy buys a spot position in an asset and then sells call options against. This hypothetical example buys spot BTC at $65,000 and sells a December 2026 ATM call with implied volatility of 40%. Source: Grayscale Investments. Implied yield based on annualized return to expiry and excludes financing costs; implied yield is expressed relative to spot price; forward price assumed to equal spot price. Price thresholds as of expiry date. Data as of July 14, 2026.

Crypto Markets Are Rewarding Fundamentals

The crypto bear market and rising institutional adoption are driving greater performance differentiation across crypto assets—and those with stronger fundamentals are standing out.

We can show this with our Crypto Sectors family of indexes, developed in partnership with FTSE/Russell.1 The Financials Crypto Sector includes protocols at the heart of onchain finance. Their fundamentals are closely tied to adoption of stablecoins, tokenized assets, and other blockchain use cases. Many of the protocols, including Hyperliquid, may produce significant revenue and can be valued with cash flows.

In contrast, the Consumer & Culture Crypto Sector includes mostly memecoins like Dogecoin.2 Although we think promising consumer applications may emerge eventually, this Crypto Sector does not have many projects with strong fundamentals today.

Since the start of 2024, the Financials Crypto Sector is up roughly 15% while the Consumer & Culture Crypto Sector is down about 75% (Exhibit 1).

Key Takeaway: Crypto markets are rewarding tokens with strong fundamentals. These include Hyperliquid and other leading financial applications of blockchains.

Exhibit 1: Financials are outperforming their Consumer & Culture peers

Crypto Sector Indexes are weighted by the square root of token market cap. See here for more information.

Memecoins currently account for ~85% of the market cap of the Consumer & Culture Crypto Sector. Source: FTSE/Russell, Grayscale Investments. Data as of July 10, 2026.

The Evolution of Tokenized Equities

The tokenization of global equity markets is underway. Tokenized stocks are expected to bring a variety of user benefits, including 24/7 trading. The next big step forward will be the launch of the DTCC’s tokenization pilot on the Canton Network, which will allow tokenized equities (and other assets) to move across blockchain infrastructure within the regulated financial system. We see the tokenization of equity markets progressing in three phases, with each phase driving value to different types of blockchain infrastructure (Exhibit 1).

Phase 1 is the third-party “wrapper” model where issuers hold equities in a Special Purpose Vehicle (SPV) and the tokenized stock is a claim against the SPV. Today, more than 70% of tokenized stocks by market cap use this model. Wrapper-style tokenized stocks do not represent true ownership but can be used throughout DeFi and may be attractive to retail investors. They trade on Ethereum, Solana, BNB Chain, and other networks.

Phase 2 is the “entitlement” model and is exemplified by the DTCC pilot. Rather than creating new versions of securities, DTCC is bringing existing eligible securities onchain through its regulated post-trade infrastructure, with the Canton Network serving as the first blockchain for its pilot.

Phase 3 is the issuer-sponsored model where companies issue securities natively onchain. Last week, Securitize became the first public company to tokenize its own common stock at the time of its NYSE listing. We believe this model has the greatest long-term potential but will require additional regulatory clarity. The issuer-sponsored model favors open-architecture blockchains like Ethereum and Solana, as well as hybrid networks like Avalanche, in our view.

All three tokenization models are likely to coexist for years.

Key Takeaway: There are multiple models for tokenized equities. The blockchain networks best positioned to capitalize on the growth in tokenization include, in our view, Ethereum, Solana, BNB Chain, Avalanche, and Canton Network.

Exhibit 1: Third-party platforms currently dominate the tokenized equity market, while Ethereum, Solana, and BNB Chain account for the majority of onchain assets

Shifts by Strategy Reduce Bitcoin Tail Risks

Recent actions by Strategy, a leading Bitcoin digital asset treasury (DAT) corporation, should restore market confidence over its financing structure and, in our view, may help Bitcoin’s price find a more durable bottom.

On the surface there is nothing wrong with Strategy’s balance sheet. The company owns ~$52 billion worth of Bitcoin and has just ~$7 billion worth of debt.1 Its annual dividend obligations on its preferred equities are less than $2 billion. Strategy clearly has sufficient financial resources to service its debt and dividend obligations.

Nevertheless, shifting market conditions created uncertainty about how Strategy would balance competing priorities. In late May, the company let its US Dollar cash reserve fall to about $870 million, implying only about six months of dividend cover (see chart). It needed to raise more cash. Would the company sell new shares at low valuations? Sell Bitcoin, which its executives had previously eschewed? Sacrifice its preferred shareholders?

Strategy’s new framework, announced in late June, addressed those open questions. Perhaps most importantly, the company clarified that it would issue shares and sell Bitcoin as needed to maintain sufficient US Dollar reserve cover for its dividend obligations.2 On Monday, July 6, Strategy confirmed that it sold about $216 million Bitcoin the previous week. Strategy’s Dollar reserves now total $2.55 billion, or the equivalent of about 17 months of dividend cover (see chart). The rebound in the price of STRC suggests investors are now more confident about the instrument.

Key Takeaway: Strategy is selling more Bitcoin. But this will restore confidence in its financing structure and help Bitcoin find a more durable bottom, in our view.

Exhibit 1: Bitcoin sales funded Strategy’s USD Reserve and bolstered investor confidence

1 Convertible bonds with a weighted average coupon of just ~0.5%. Source for data: Strategy.

2 Strategy said it will hold at least 12 months of preferred stock dividends in USD reserves.

Solana is Designed to Host Applications at Mass Scale

The Solana blockchain is home to a diverse ecosystem of decentralized use cases, serving as the settlement layer for more than 1,000 unique applications.1 Year-to-date, the network has averaged over 100 million daily transactions—more than 1,200 per second (see chart)—and 4.3 million unique daily users, driving about $100 million in total YTD transaction fees.2 This is all driven by a suite of applications focused on areas such as decentralized finance, social trading, and decentralized infrastructure.

A few of the most exciting Solana-based applications include:

Raydium, a decentralized exchange (DEX) and core component of Solana’s decentralized finance (DeFi) infrastructure. Year to date, Solana DEXs have traded more than $360 billion in volume, more than any other blockchain ecosystem.3

Pump.fun (“Pump Dot Fun”), a memecoin launchpad and social app. Pump.fun has about 1.3 million monthly active users and generates around $690,000 in revenue per day.4

Geodnet, a decentralized physical infrastructure (DePIN) project focused on building location positioning infrastructure for physical AI systems. Geodnet enables users to contribute data that provides centimeter-level positioning accuracy for autonomous vehicles, drones, robotics, and other machine-operated systems.

Key Takeaway: Solana hosts a thriving ecosystem of applications generating meaningful onchain activity, with SOL offering investors exposure to the network's continued growth.

Exhibit 1: Solana offers lightning-fast settlement capabilities at scale, facilitating over 1.2k transactions every second year-to-date.

1. DappRadar. Data as of June 17, 2026.

2. Artemis. Data as of May 31, 2026.

3. DeFi Llama. Based on the 30 days ending June 17, 2026.

4. Token Terminal. Data as of June 16, 2026. Based on 90-day averages ending June 16, 2026.

Two Scenarios for the Bitcoin Bear Market

This week the price of Bitcoin slipped below $60,000 and made new lows for the cycle. From its peak of $125,000 in October, Bitcoin is now down more than 50%. In our view, the latest drawdown represents another cyclical pullback around Bitcoin’s rising longer-term trend (Exhibit 1).

Exhibit 1: Bitcoin’s drawdown is another cycle around a rising trend

Several factors have weighed on the price of Bitcoin in recent months. Most importantly, a shift in expectations for Fed policy dented the debasement trade. Late last year, prediction markets expected President Trump to nominate the relatively dovish Kevin Hasset for Fed Chair. Instead, he nominated the relatively hawkish Kevin Warsh, who stepped into the role this month. Because of stubborn inflation, the Fed is now expected to hike rates rather than cut rates this year (Exhibit 2). The price of spot gold, which also competes with fiat currencies like the Dollar, is down ~25% from its highs, comparable to the drawdown in Bitcoin after adjusting for volatility.1

Exhibit 2: Warsh Fed is now expected to raise interest rates

In addition to the shift in Fed expectations, crypto markets are struggling with (a) uncertainty around the potentially passage of the CLARITY Act, (b) pressure on Strategy’s levered balance sheet, and (c) investor caution about the digital security risks from quantum computing.

At the same time, the improved regulatory backdrop continues to drive institutional adoption of public blockchain technology—which we see as the most important structural trend for digital asset markets. Just this month, the CFTC approved the first perpetual futures for US markets, and growth in both stablecoins and tokenized assets will support many leading blockchains. In addition, the broader social and political trends underpinning the crypto asset class are still very much in place: unchecked growth in government debt, declining trust in intermediaries, and the rise of AI, which may motivate the need for alternative payment systems and technology that preserves human sovereignty.

Broadly speaking, we see two ways out of the Bitcoin bear market (Exhibit 3). In our baseline scenario, the CLARITY Act clears the US Senate, Strategy takes steps to shore up its balance sheet, and the Fed holds off on rate hikes. If the incoming news cuts in this favorable direction, Bitcoin’s price may be already close to its low. In a downside scenario, the CLARITY Act does not pass this year, Strategy and other DATs deleverage further, and the Fed is forced to raise rates due to persistent inflation. If downside risks materialize, we could see Bitcoin fall moderately further. Prior cycles have seen Bitcoin’s price fall ~80%, but we do not think the peak-to-trough drawdown this cycle will be as deep this time around, due to the more muted bull market and stickier institutional demand for digital assets.

Exhibit 3: Two scenarios for Bitcoin out of latest bear market

Grayscale Research remains incredibly optimistic about the medium- and long-term outlook for the crypto asset class. It was the best performing asset class over the last ten years2, and we think it will be again over the next ten years. Investors will risk manage their portfolios around short-term catalysts to meet their individual needs. But, in our view, the current bear market offers a compelling opportunity for investors with longer term horizons to position for structural growth in public blockchain technology and digital asset valuations over the coming decade.

Key Takeaway: Whether Bitcoin’s price has reached its cyclical low point depends on upcoming catalysts, including Fed rate decisions and progress on the CLARITY Act in the US Senate. We see many structural positives for the crypto asset class and believe current valuations offer compelling entry points for investors with longer-term horizons.

A 25% drawdown in gold equates to a ~40-50% decline in Bitcoin, given their relative volatilities: 22% and 47% respectively over the past 2 years.

Based on asset classes as represented by S&P 500 Total Return Index (US Equities), Dow Jones Real Estate Total Return Index (Real Estate), S&P/GSCI Total Return Index (Commodities), Bloomberg US Aggregate Index (US Bonds), MSCI EM Total Return Index (EM Equities), and Bloomberg US Treasury Index (US Treasuries)

Revenue-Producing Crypto Protocols Look Cheap Ahead of CLARITY

After a protracted bear market, many income-producing blockchain applications now appear attractively valued from a fundamental perspective. In fact, most of the top 15 onchain applications by protocol revenue—including Hyperliquid—are now trading at attractive trailing 12-month multiples, many of them at single digits (see table).1 Most protocols do not have large operating expenses, so they also look cheap when valued on earnings or cash flows.

We believe that the potential passage of the CLARTIY Act—which could happen as soon as next month—may help unlock this value. Why? Because the law, if passed, could be a boon for many of these applications by bringing a traditional finance rulebook to crypto assets.

Specifically, CLARITY will help drive growth in tokenized assets and onchain finance. And almost all of the top 15 revenue-producing protocols are related to financial use cases or closely related utilities, such as oracles and staking infrastructure. We believe they stand to benefit substantially from the expected growth in onchain transaction activity that is expected to follow the passage of the CLARITY Act.

Key Takeaway: Many revenue-producing crypto assets are trading at low multiples ahead of potential passage of the CLARITY Act, creating an attractive entry point for fundamental investors, in our view.

The table excludes Chainlink, which earns both onchain and offchain revenue.