Spoken words and implemented policies are not the same thing

econews. Hyperliquid (HYPE+2.65%) soared by 11% on Aug. 19 after President Donald Trump mentioned it by name at a White House crypto summit, saying that the chair of the Commodity Futures Trading Commission (CFTC) was working to create a path for the popular crypto derivatives exchange to operate legally in the U.S. It currently blocks U.S. users to avoid potentially running afoul of securities and trading regulations. The coin's hot streak has continued enthusiastically since the president's remarks, and its price is 50% higher than just 30 days.

Not so fast

I hold Hyperliquid. It's one of the very few cryptocurrencies I'm interested in buying right now, and I was pleased to learn that the president had mentioned it. My impulse was to buy even more of it, immediately.

But an event that makes the market exuberant about your holdings should be used as an opportunity to step back and pause for a moment, not as an excuse to overinvest in something you already own. There's no point in letting excitement get the better of your portfolio, because the emotion will fade quickly, but the consequences of bad decisions stemming from excitement can last quite a while.

Regarding Trump's statement, investors must recognize that no filing has been made with regulators; in fact, there is no public docket or registration application on file for Hyperliquid at the time of this writing. Even if the government had left a paper trail to find, there would still be the critical distinction between policies that were once proposed and those that had actually been implemented.
The president can't open the door for Hyperliquid to compete in the U.S. by making a remark at a meeting with regulators and industry leaders. And if the exchange is ultimately allowed to legally operate in the U.S., it may be on limited or undesirable terms.

The coin isn't a screaming buy based on what Trump said.

The Coinbase yield deal could still be huge

But there's still a new, substantive reason to buy Hyperliquid.

On Aug. 26, Hyperliquid began accruing its share of the reserve yield on its exchange's holdings of the USDC stablecoin, per a deal it struck with Coinbase Global and Circle Internet Group earlier this year.

The deal lets it harvest roughly 90% of the yield after costs from the Treasury bills backing the value of the stablecoin every 30 days. Then, 99% of the yield will be spent buying Hyperliquid's own coin on the open market, which it will then hold outside the supply count to deliver a return to holders. CoinGecko estimates that the deal will contribute around $182 million per year to buyback activity, an 18% lift to the protocol's revenue. The first payout is scheduled for Oct. 3.

I plan to buy more Hyperliquid to capture upside from its USDC yield -- but as exciting as this asset is, I'll take a measured approach when I do so.

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