One of crypto’s best known investment firms is making a big bet on a token that has been sliding. Multicoin Capital, which manages about $2.7 billion, says the token behind HyperLiquid is now the largest holding in its hedge fund. The announcement has not given the token a lift — it is down about 20% from its September high. Joining us is Spencer Applebaum, General Partner and Co-Head of Venture at Multicoin Capital. Spencer, thanks for joining us today.
I appreciate you having me.
What is HyperLiquid and why did Multicoin make this bet?
HyperLiquid is a decentralised exchange protocol that allows anyone, anywhere in the world to trade any asset 24/7. Large crypto exchanges like Binance and Coinbase are custodial — you have to give them your money and trust them. HyperLiquid is completely trustless, decentralised, and permissionless. They have a token called Hype where 99% of revenues that accrue on the platform go to buy back Hype. We think the market is generally underpriced for the opportunity.
It is down 20% since September. What is the market missing?
The market is valuing it as a crypto exchange only. What we have started to see is HyperLiquid expanding into other asset classes. When the oil conflict started in Iran, people started trading oil exposure on HyperLiquid on the weekend when no other markets were available. During the Cerebus IPO, traders on the Nasdaq floor were looking at pre-IPO derivatives on HyperLiquid to figure out where the market would actually open. The market under-appreciates the scope of the opportunity — it can be an exchange for every single asset class in the world.
HyperLiquid uses most trading fees to buy back its own tokens. How does that work and what happens if trading slows?
Every time a user makes a trade, they pay a fee. That fee goes to the HyperLiquid Assistance Fund, which programmatically — with nobody controlling it — buys back Hype on the open market and burns the token. Think of it like a stock buyback. Like any business, if revenue goes down, buybacks will also go down.
Open interest on HyperLiquid nearly doubled since last quarter and is close to CME Group’s crypto futures level. How did a crypto platform grow that fast?
It is at an all-time high in both trading volume and open interest against all the large centralised exchanges — Binance, Bybit, OKEx. Market share has continuously grown since launch. The reason is the expansion through HyperLiquid Improvement Proposal 3, which allows other asset classes to be traded that you just do not see on other crypto exchanges. And Improvement Proposal 4 now allows new financial products — options and prediction markets — which are also gaining traction.
Multicoin bought on the open market — not a private deal. Why does that matter?
There is a perception that large investors like us get sweetheart deals — buying tokens at a discount from a foundation and then talking about it publicly. In this case, we have the same access as anyone sitting at home with a laptop or smartphone. HyperLiquid is trying to democratise finance by allowing anyone, anywhere to trade any asset — and that extends to who can own the token.
What is your advice for everyday investors who see a big fund buy a token and want to follow?
Do not follow a fund just for the sake of following a fund. Understand why the fund has the conviction it does. We published a 44-page research and analysis on HyperLiquid about three months ago — I would encourage everyone to read that, make their own independent decision, and go from there. Randomly chasing whatever funds are buying is not particularly useful. Understanding their thesis is incredibly valuable.
Spencer, thank you so much for joining us.
Thank you. I appreciate it.
