Trump's Hyperliquid Comments Fuel Options Frenzy and Spark Insider Trading Questions

President Trump’s unexpected remarks on regulating the decentralized exchange Hyperliquid sent its associated tokens and shares soaring, prompting an unprecedented surge in options trading. The rally, however, was marred by suspicious call-buying activity before the official announcement, raising questions about potential insider knowledge. This event underscores the volatile intersection of political rhetoric, emerging crypto markets, and regulatory efforts.

Wednesday was already shaping up to be a standout day for crypto assets, with Bitcoin hitting its highest trading levels since June. This surge was partially driven by anticipation surrounding President Donald Trump's scheduled meeting with crypto industry leaders.

The market was then rocked by a major announcement around 3 p.m. ET. President Trump hinted at the potential regulation of Hyperliquid, a decentralized exchange gaining traction among traders for its 'perpetual futures' trading—high-leverage, non-expiring derivatives that have challenged established exchanges this year, despite U.S. residents currently being barred from the platform.

Trump stated in a press conference, “I understand that [Commodity Futures Trading Commission Chair] Mike [Selig] is also working to bring Hyperliquid into the United States in a fully compliant and legal fashion.”

Following this declaration, shares of Hyperliquid Strategies (PURR), a publicly traded treasury company that owns HYPE tokens, skyrocketed 30% before the closing bell, pushing its year-to-date gain to over 163%. The digital token HYPE, which underpins the exchange's blockchain operations, jumped 18% to near record highs. Conversely, major traditional exchanges experienced declines: Cboe Global Markets dropped 3.5%, Miami International Holdings fell 3.1%, and CME Group slid 1.7%.

Hyperliquid shares in the past day

David Schamis, CEO of Hyperliquid Strategies and founding partner at Atlas Merchant Capital, commented post-market, “We've been trying for a while to figure out how to get into the U.S. and the CFTC has been quite responsive, but when Trump says it at a press conference, it means it's a priority.” He added, “You can't do something like this and make new rules – you see how hard it is to get Clarity [Act] passed. You have to figure out how to make it work with rules existing today,” referring to a proposed bill establishing a regulatory framework for cryptocurrencies.

The options market for Hyperliquid saw an astonishing surge in activity, with volume nearly eight times its 30-day average. Over 120,000 calls were traded, significantly outweighing the fewer than 8,000 puts. Traders bought almost 45,000 calls and sold 29,000, with approximately $10 million in premium changing hands. The largest single trades occurred about 30 minutes after Trump's announcement, including someone purchasing 2,000 8-strike calls expiring in November and December for approximately $510,000.

More alarmingly, a flurry of heavy call-trading activity was observed in the hours before the announcement. Just under $2 million worth of calls across various strikes and expiries were traded before 3 p.m. Some trades exhibited characteristics of rushed, indiscriminate buying, suggesting eager pre-announcement positioning. For instance, around 11 a.m., a trader spent $65,000 on 719 8-strike calls expiring in mid-October, paying 90 cents each for a contract that had only 67 open positions before Wednesday. By market close, these calls were valued at $2.45 each, netting the trader an estimated $111,000 profit.

Dennis Davitt, CNBC contributor and co-founder of Millbank Dartmoor Portsmouth, expressed skepticism: “These by definition were opening trades so you're asking me to believe someone went out in front of this announcement and sold a bunch of upside call opening trades? I hope they have a robust alibi.”

Broader crypto-related assets also reacted. Trading in the iShares Bitcoin Trust ETF (IBIT) was more than 4.5 times its 30-day average even before the Hyperliquid news, as Treasury yields softened and investors shifted towards previously underperforming sectors. Bitcoin volatility, as measured by Volmex Labs' BVIV Index, jumped 13% after reaching a year-to-date low. Shares of Michael Saylor's Strategy (MSTR) rallied nearly 13%, and Coinbase (COIN) surged almost 10%, despite both being down around 30% year-to-date following Bitcoin's weakest performance relative to the S&P 500 since 2019.

Schamis provided clarity on Hyperliquid Strategies' financial position: “We have four things on our balance sheet: two billion of HYPE token, cash, common equity, and deferred tax liability. No debt and no funky converts.”

Correction: Hyperliquid Strategies does not own the Hyperliquid exchange.