Bitcoin's flop era

The stock market may be flying past red flags and hitting new peaks regularly, but investors aren’t letting bitcoin off the hook so easily.

The blue-chip cryptocurrency is down 25.35% year to date, as geopolitical chaos and higher-for-longer interest rates have spooked investors. Bitcoin’s performance has been so rough that it’s lagging stocks by the largest margin since 2019.

Bitcoin is out of vogue: Part of the problem is that retail investors, who were once starstruck by the volatile digital asset, have moved on, preferring to send shares of AI stocks to the moon. Just look at ETFs tracking bitcoin, which have lost about $3.4 billion since May, according to Bloomberg.

On top of that, institutional investors are instead looking towards the next big thing in crypto—tokenization—according to the Wall Street Journal. Even the biggest bitcoin bulls are getting spooked: Michael Saylor’s Strategy just sold 32 tokens last week for the first time since 2022’s crypto winter. Striking, given Strategy’s entire business model revolved around becoming a stock play on bitcoin by guzzling tokens at a rabid clip.

Alternative-alternative assets

Investors aren’t ditching digital assets altogether, though. They’re getting hype (literally) about an under-the-radar corner of the crypto market. The HYPE token, which is connected to crypto exchange Hyperliquid, has soared about 188.1% this year, a staggering rally compared to the performance of other digital assets. HYPE reached an all-time high on Monday, and funds tracking the token have gathered $180 million in assets within the first three weeks of launching, according to Bloomberg.

Why all the hype for HYPE? Unlike bitcoin, which mostly trades on vibes, HYPE is tied to a lucrative exchange, and each trade generates a fee. The exchange then funnels a majority of those fees right back into buying even more HYPE on the open market. The catch: Unlike a stock, HYPE holders don’t own any piece of Hyperliquid.

Still, it looks like the fervor for digital gold is morphing into excitement for something resembling a normal business model.—LB