Back Into Bonds

Even though Bitcoin may be struggling at the moment, it’s important to remember one of the key reasons why it exists in the first place: governments will keep borrowing and thus money printing will continue. This week’s forward guidance looks at how bond yields are spiking as lenders demand yields not seen in years - and in some cases, not seen this century.

Elsewhere, there were concerns in crypto circles this week as two massive TradFi players threw their toys out of the pram and demanded that the CFTC regulate Hyperliquid. While HYPE initially dipped on the news, it has since ripped and set a new all-time high above $60. We take a look below at the reasons for HYPE’s defiance of wider crypto market woes and why the future only seems to be getting brighter for crypto’s flagship protocol.

💪 The Comeback Kid 💪

With the crypto spotlight currently fixed on privacy coins like Zcash, AI plays like Venice and NEAR and, of course, Hyperliquid, many have missed the fact that Ethereum has been making something of a comeback. Sure, ETH’s price has been nothing to write home about, but other metrics are a lot more encouraging.

For instance, while Solana's massive DEX volumes - once 218% higher than Ethereum’s - have collapsed by 63% since their peak, Ethereum's volumes have remained strong and are now neck-and-neck with its rival. Solana’s surge was fueled by speculative, casino-style memecoin mania that ultimately faded, taking retail capital with it. Ethereum meanwhile was busy cementing its position as the industry's most mature ecosystem. Institutional activity, large-scale DeFi liquidity, stablecoin settlement, and tokenized Real World Assets are still gravitating towards the original smart contract platform, despite all the cheaper, flashier rivals that have emerged over the years.

In today’s video, we explore why being boring is Ethereum’s superpower and detail the major infrastructure upgrades - including the upcoming Glamsterdam - that are continuously strengthening its core. Critics keep writing Ethereum's obituary, but we explain why its unmatched structural advantage ensures it will remain the dominant settlement layer for institutional finance for years to come.

You can watch that video here.

📈 Crypto Market Forecast 📈

The bond market is the most important chart in the world right now, and it’s telling a story that crypto investors cannot afford to ignore.

US 30-year Treasury yields have climbed to 5.2%, their highest level since 2007. Global long bond yields, measured as an average across all developed markets, have reached their highest since the 2008 financial crisis. Japan's 10-year yield is at a 29-year high. UK gilt yields briefly touched levels last seen in 1998.

This is where things get interesting for crypto. When bond yields rise to these levels, money flows out of risk assets and into fixed income to lock in those returns. The discount rate used to value growth assets rises, which mechanically compresses their valuations. Bitcoin fell from $82,000 to below $77,000 this week, and the data underneath that move suggests the selling pressure is more than routine profit-taking.

Bitcoin ETFs saw $648 million in outflows on Monday, the largest single-day exit since January. Cumulative Volume Delta, which measures whether buyers or sellers are driving price action, turned deeply negative in both spot and futures markets. Options market participants are paying up for protective puts, with delta skew rising from 10.9% to 14.4%. Together, these signals suggest a market that has shifted from passive dip-buying to active hedging.

There is just one small problem with the full bearish case, and that is that on-chain data is telling a different story. Bitcoin's realised cap has stabilised near its $63,000 low from February. Historical precedent across previous cycles shows that when the realised cap stabilises after a major drawdown, it has tended to mark the cycle bottom. K33 Research has also noted that the current period behaves differently from the bear market rallies of 2014, 2018, and 2022. It has lasted far longer and the 200-day moving average has been trending lower rather than climbing, which removes the structural condition that fuelled those previous violent reversals.

Meanwhile, the regulatory picture improved significantly this week. The CLARITY Act cleared the Senate Banking Committee 15-9, with two Democrats crossing the aisle. It is not perfect - language protecting DeFi developers was weakened in last-minute negotiations - but it represents the most significant progress on crypto market structure legislation in US history. The bill now needs a Senate floor vote, where ethics provisions around the Trump family's crypto holdings remain the unresolved tripwire.

The SpaceX and OpenAI IPO pipelines deserve attention from a macro perspective. New Nasdaq rules will fast-track SpaceX's entry into the Nasdaq 100 just 15 days after its IPO, with a weighting three times its initial free float. JPMorgan estimates that if SpaceX eventually floats 50% of shares at a $2 trillion valuation, passive funds will be forced to sell approximately $95 billion of existing large-cap tech stocks to fund the purchase. This creates near-term selling pressure on AI and semiconductor stocks that have been supporting broader equity sentiment - which has indirect implications for crypto risk appetite.

In sum then, the next two to three weeks are likely to remain choppy. The bond market is the dominant force, and until US 30-year yields stabilise, risk assets will face periodic pressure. Bitcoin needs a daily close back above $79,000 to suggest the selling has exhausted itself. If it holds the $74,000-$75,000 support zone on any deeper test, that would reinforce the on-chain view that February's $63,000 low marked the cycle bottom.

Our directional call remains cautiously constructive over the medium term. The CLARITY Act, the institutional adoption wave, and the STRC accumulation cycle from Strategy all favour higher prices once the macro backdrop stabilises. But we are not there yet, and trying to catch the exact low in this environment is a losing game. Patience is the position.

💪 HYPE Resilience  💪

A Bloomberg report last weekend revealed that both the world's largest derivatives exchange and the world's largest stock exchange were lobbying against Hyperliquid, urging the CFTC and members of Congress to crack down on the offshore derivatives exchange.

They claimed that the exchange’s anonymous, around-the-clock perpetual futures markets could distort global oil benchmarks, facilitate insider coordination, and let state-linked actors evade sanctions.

By all accounts, this should have been a bad week for $HYPE. After all, tighter regulations would introduce restrictions on a previously unfettered platform.

Instead, the token’s price made a new all-time-high of $62.

To be fair, HYPE did fall somewhere between 6% to 10% on the initial reports. This price decline, however, was erased just a couple of days later. In fact, the token price continued going higher, rallying by almost 53% since the dump.

How exactly did this happen?

Well, the answer is rarely ever straightforward in cases such as this, but we can say with confidence that one of the main factors has been the recently launched HYPE spot ETFs. Both the 21Shares HYPE ETF ($THYP) and Bitwise’s product ($BHYP) have pulled in cumulative net inflows of $63.96 million in their first week of launch.

Unlike most ETF launches where inflows and volume spike on day one and then fade, the newly launched US spot HYPE ETFs saw exponentially higher inflows each day during their first week. Bloomberg’s senior ETF analyst Eric Balchunas noted that this was a rare phenomenon. Bitwise also announced that it will devote 10% of the BHYP management fee to buying HYPE and holding it on its own balance sheet, staked, for a minimum of twelve months.

Beyond ETFs, we also saw long-term accumulation signals from other institutional investors. Notably, Lookonchain flagged that two wallets linked to Grayscale, which filed an S-1 for a spot HYPE ETF back in January, have bought and staked 510,387 HYPE worth about $24.95 million over the past week.

The analyst also recently claimed that a wallet (0xb5E4) connected to a cluster of wallets previously associated with Andreessen Horowitz (a16z), has been accumulating roughly $67M worth of HYPE tokens over the past month. Notably, some reports claim this puts a16z’s total holdings at roughly 9.18 million HYPE. This position, currently worth ~$525 million, would make the firm the sixth-largest HYPE holder on-chain. Significantly, a large chunk of these holdings appears to be staked across several wallets.

On that note, we also saw reports about a wallet linked to Galaxy Digital buying 158,100 HYPE (worth $8.8 million) on Thursday. While it’s worth noting that a lot of these wallet attributions are speculative with no formal claims from the named entities themselves, it doesn’t change the fact that there are wallets accumulating HYPE despite the FUD.

If you need further proof of institutional bullishness, look no further than the memo recently put out by Bitwise CIO Matt Hougan. He describes Hyperliquid as “one of the most important crypto projects to emerge in years.” He believes HYPE is one of the most mispriced assets in crypto due to the market making a category error. He claims Hyperliquid is currently valued as a perpetual-futures venue when it should be valued as a global super-app spanning crypto, equities, commodities, FX, prediction markets and structured products. He points out that the second category would make its addressable market the $600 trillion global assets market instead of the smaller $3 trillion crypto market.

For what it’s worth, the data supports his case.

Over the past few months, Hyperliquid the protocol has firmly established its market dominance. In the 16 months since its launch, the protocol has recorded $4.33 trillion in lifetime volume and generated just over $1.16 billion in revenue – with roughly $1 billion of that revenue going towards token buybacks via the HYPE assistance fund.

For context, this makes Hyperliquid second only to Solana in chain revenue. But the more important difference is that Solana’s revenue comes from hundreds of applications (Pump.fun, Jupiter, Raydium, etc) while Hyperliquid's revenue comes almost entirely from perpetual futures trading on its native DEX.

During the recent pump, Hyperliquid even managed to flip Solana in FDV. While the community celebrates, we’ll admit this is a shallow metric given that the circulating supply of HYPE is only a quarter of its total supply, while Solana has almost all of its supply already in the market. Solana is still, by the metric that matters most in real-time, three to four times larger than Hyperliquid.

That said, the aggressive valuation of HYPE in spite of its impending supply unlocks is an impressive signal in itself. After all, it signals the present-day holders’ conviction in the future of the project. And unlike overvalued crypto projects in previous cycles, there’s a case to be made that modern crypto investors are more conscious about blind hopium. No doubt, the flood of institutional bids also strengthens this case.

Besides, when it comes to regulatory crackdowns, those things take anywhere between six months to a couple of years to play out. In the meantime, the odds of this being a relatively frictionless process for Hyperliquid are quite high given the project’s recently established partnership with stablecoin issuer Circle, which is a US-regulated entity itself. Besides, the Hyperliquid Policy Center, run by Jake Chervinsky, is already engaging the CFTC to find a compliant path for US users, which tells you that the team is ahead of the curve in dealing with the threat.

It’s also worth noting that the timing of the CME and ICE’s lobbying efforts itself is suspect. Notably, it comes just a week before CME is set to launch its own Bitcoin Volatility Futures and multi-asset crypto index future products. Both vehicles are explicitly designed to give institutions a regulated alternative to the leveraged trading Hyperliquid offers with far less friction. In other words, this is a desperate attempt by incumbents to stay relevant. Stay Hyperliquid.

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📖 Quote of the Week 📖

This week saw a major win with the CLARITY Act getting out of markup - but the final hurdle awaits.

“Ignore the noise. When you believe in a trade, tune out short-term price fluctuations and media hype” - Michael Burry

Team Coin Bureau

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.