Arthur Hayes Warns HYPE Could Underperform ETH and ZEC

TLDR:

• Arthur Hayes says Hyperliquid proved on-chain perpetual futures have real demand and a working product.
• He sees HYPE’s main risk as underperforming ETH and ZEC rather than necessarily losing money. 
• Perpetual DEXs face rising competition as products, features, and fees become increasingly similar.
• Hayes sold all his HYPE and NEAR holdings just days after publicly setting a $150 HYPE price target.

Arthur Hayes, the founder of BitMEX, said Hyperliquid has proven that demand exists for on-chain perpetual futures markets.

On October 16, however, he warned that HYPE has become a consensus trade, which has weakened its risk-reward profile.

According to Hayes, the main danger is not a price collapse. Instead, HYPE may trail other crypto assets, including ETH and ZEC, over the coming period. His comments came in a post that praised the product but questioned the investment case.

Why Hyperliquid Faces Tougher Competition

Arthur Hayes acknowledged that Hyperliquid built a product traders actually use. Trading volume is present, and the platform works as intended. He also said he is willing to use its products as a consumer. Even so, he does not want to take part as an investor.

A great product does not always translate into a strong investment, according to Hayes. Perpetual DEXs now face rising competition as their offerings become more alike.

Centralized exchanges, traditional exchanges, and a growing list of decentralized rivals all offer similar products. In this setting, features and fees are easy to match.

When rivals match features and fees, returns on capital tend to shrink. As a result, success depends on execution, distribution, incentives, and token economics.

Hayes sees this as a difficult setup for investors to underwrite. Each of these factors can shift quickly as new platforms launch.

Hayes also pointed to HYPE’s reputation as a widely recognized perp-DEX success story. Because the trade is crowded, he believes the token offers less room to re-rate. The question, in his view, is whether HYPE delivers the best risk-adjusted return from here.

Why ETH and ZEC May Offer Better Setups

Arthur Hayes argued that HYPE could underperform without falling in price. Holders may lose ground simply because other assets rise faster.

This is the core risk he described, rather than a direct loss of capital. Relative performance, therefore, matters more than absolute price in his view.

ETH has the scale, security, and institutional DeFi narrative to attract capital. If the market rotates back toward large-cap crypto, it could benefit.

Hayes sees that setup as stronger than HYPE’s current position. He treats ETH as a more established option for investors seeking exposure.

ZEC offers a different kind of bet. It is a higher-risk way to express demand for privacy and scarce assets. Hayes noted that both ETH and ZEC could surprise investors if liquidity expands. He added that being early to a crowded winner may appeal less when capital chases upside.

Arthur Hayes previously set a $150 price target for HYPE. Days later, he announced that he had sold all his HYPE and NEAR holdings. 

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