Happy HYPE ATH to those of you who celebrate.

Seems the demand for spot HYPE from the two ETFs launched so far have pushed HYPE to new highs, and the other tokens in the ecosystem also have some tailwinds from this, albeit not reaching ATHs themselves.

We’ll spend more time in this week’s update talking about HYPE’s price and any actions we’re planning to take and why.

First off, quick numbers update below.

Information gathered at midnight UTC at the end of the week. Swings are high, so for most up-to-date token prices, check Hyperliquid.

A small but much-needed step in the decentralization process for Hyperliquid.

The initial pace to 24 validators was much faster so we’re glad to see the increase to 27.

This will stay a long-term challenge. More validators, perhaps even more distributed geographically, will be a challenge while maintaining performance.

The core team seems to be taking careful steps in that regard while prioritizing performance.

Now, about that all-time high…

Let’s split this into three sections to make it easier to understand:

So…

What is happening with the HYPE price, and what is causing it?

21Shares and Bitwise ETFs buy spot HYPE, and their inflows have been extremely positive. 

Hyperliquid Strategies, aka PURR DAT, has also been hitting their ATM to sell shares to buy more HYPE.

AQA v2 news has also now spread more, with some onchain actions showing Circle and Coinbase having each staked 500k HYPE.

Pre-IPO perps from Trade[XYZ] have also been very successful compared to Ventuals (release the 500k HYPE Ventuals, if you’re reading this!).

Last but not least, people pay attention when the token goes up, and they often FOMO more than when it’s going sideways or down.

Which is not necessarily unprofitable for them, but it certainly adds fuel to the fire.

So, all this pushed HYPE to over $64 ATH and ~40% up for the week.

Why is it so impactful, though?

Well, there’s not that much supply ready for sale when it comes to HYPE. So the impact of inflows from ETFs buying spot is significant compared to the market cap of HYPE.

The Assistance Fund is also an indiscriminate buyer with over 44M HYPE burned so far.

In fact, the current ATH price per token is still slightly below the previous all-time high in terms of market cap!

This is what strong deflationary tokenomics with a surge of demand leads to.

It doesn’t mean HYPE can only go up every day as it seemed recently. Heck, even within a day, the swings can be massive. So let’s have a look at some of the risks…

What are the risks?

The most typical risk everyone brings up is the regulatory risk. As we’ve said last week, Coinbase and Circle now have a vested interest in a favorable regulatory outcome for things like Hyperliquid.

The current US admin is certainly very pro-crypto innovation.

The Hyperliquid Policy Center is doing work.

While the risk is not zero, it’s relatively low, especially compared to two years ago. We’d argue the current price is also taking that into account.

Unstaking queue is high with 4M HYPE expected to be unstaked on 28th May, and a total of 7.66M in the next 7 days. We’ve seen higher, but not often, and obviously, it is a very high dollar value.

There’s also a team unlock coming on 6th June. While the team rarely sold in the orderbooks, high unlocks always look bearish.

While none of these risks are currently a “OMG, HYPE will go to zero” type risk, we can understand the point that sell pressure is also likely to increase with more holders taking some profit.

And this brings us to the third part of our take…

What are we doing?

We decided to take profit on around 10-15% of our HYPE holdings over the last couple of weeks. We didn’t get to “sell at the ATH,” and we’re fine with that. We got a few orders filled in the $45 to $55 range.

While we still strongly believe in HYPE and Hyperliquid, we got more than 20% more HYPE over the last 12-18 months from staking and from airdrops, so we basically sold some of that HYPE we got by allocating our existing holdings.

Also, our size is not size; we don’t move markets.

For the next few weeks, we don’t plan to sell more in the $50-60 range but if we see this uptrend continue with strong ETF inflows, we might sell another 5-10% over $70.

The main reason: If HYPE is becoming an unconformably big part of our portfolio, we prefer to take some profit rather than becoming too emotionally attached to the token price. Plus, round-trips can still be painful.

And we’d recommend you do the same: Look at the % of portfolio you have in HYPE, decide if you’re OK with some 25-30% swings, and take it from there.

If you are set and can hold HYPE with zero impact on your day-to-day, we’d say it’s fine to not sell and passively hold for the potential upside.

We still think it’s the best asymmetric bet in crypto right now. If Hyperliquid follows through on the roadmap to house all of finance, it will be a top 3 asset in crypto, and it’s not going to be number 3.

But that path is not guaranteed. Derisk and take profit if things get too spicy for your portfolio.

Bitwise uses 10% of management fees for HYPE. Piggybacking off the price discussion above, Bitwise mentioned they will keep 10% of their management fees in HYPE. Not a big number but solid to start off, and we’re hoping they will do a bigger cut. 

You can redelegate your KHYPE to the validator of choice. Less relevant for day-to-day delegation at the moment, though you can at least support your preferred validator or split your “risk” but extremely relevant for future governance votes based on validator votes and weighted by staking percentage.

ProjectX DEX airdrops $1M to top 10k points holders.Most people were disappointed. We don’t LP on any such DEX, it’s a nightmare to manage positions and taxes to truly get an ROI better than staking and holding. But we can understand the disappointment since the $1M is roughly 10% of the fees ProjectX made in this period apparently? We’re honestly not deep into this because we don’t think we can allocate our capital profitably in such setups.

Unstaking and sell orders? That’s going to be what everyone’s watching and what will affect the price of HYPE the most next week, in all likelihood. Buckle up, or just tune out and come back in 2 weeks.