Arthur Hayes makes a major bet! HYPE outperforms all 1 billion market cap Shitcoins over the past six months

Arthur Hayes responds to Samani’s criticism, betting that HYPE will outperform all over $1 billion market cap shitcoins starting from February 10. Hayes also states that BTC crashes are due to a sell-off cycle caused by delta hedging of structured products related to BlackRock’s IBIT. Pantera Bi believes it’s due to Asian physical yen arbitrage unwinding.

Arthur Hayes Publicly Challenges $1 Billion Market Cap Shitcoin

In response to former Multicoin Capital managing partner Kyle Samani’s statement that “multiple structural issues in the crypto industry are reflected in Hyperliquid,” legendary trader Arthur Hayes comments: “Since you say $HYPE isn’t good, let’s bet. I bet that from February 10, 2026, HYPE’s gains will surpass any other shitcoin with a market cap over $1 billion (priced in USD) on CoinGecko.”

This public bet is highly topical. Hayes and Samani are heavyweight figures in the crypto industry; Hayes founded one of the world’s largest crypto derivatives exchanges, while Multicoin Capital, managed by Samani, is a top-tier crypto investment fund. Their public wager will attract industry-wide attention, and HYPE’s performance over the next six months will become a market focus.

Hayes’s betting terms are extremely precise: “Market cap over $1 billion shitcoin.” This threshold excludes mainstream assets like Bitcoin and Ethereum (which are usually not called shitcoins), but covers most altcoins. Solana, Cardano, Avalanche, Polygon, and others fall within this range. Hayes believes HYPE can outperform all these projects, which is a bold prediction given HYPE’s market cap is much smaller than these competitors.

Key Terms of Hayes’s Bet

Betting party: Kyle Samani (former managing partner of Multicoin Capital)

Bet target: HYPE vs all shitcoins with market cap over $1 billion

Time frame: From February 10, 2026, for six months

Winning condition: HYPE’s USD gains exceeding all competitors

Such public bets are not uncommon in crypto, but often devolve into trash talk rather than real stakes. If Hayes and Samani actually sign a legally binding agreement with a set stake amount, it could become one of the most notable bets in crypto history. The outcome in six months will impact their reputations and test Hyperliquid’s technical approach and the viability of decentralized derivatives exchanges.

From a market perspective, Hayes’s public stance could give HYPE short-term upside. As a pioneer in derivatives trading, Hayes’s endorsement carries significant influence. Many investors might buy HYPE expecting it to outperform the market. However, it’s a double-edged sword: if HYPE underperforms, Hayes’s reputation could suffer, and HYPE might face disappointment-driven sell-offs.

The Black Hole of ETF Delta Hedging Sell Cycles

Legendary trader Arthur Hayes believes recent Bitcoin price declines are driven by institutional traders unwinding delta hedges related to BlackRock’s ETF. In a February 7 post on X, Hayes discusses structured financial products linked to BlackRock’s iShares Bitcoin Trust (IBIT). He argues that falling Bitcoin prices force issuers of these notes to sell Bitcoin to manage their risk exposure. Professionals call this process delta hedging.

Hayes explains that these structured notes are typically issued by large banks, aiming to provide institutional clients with Bitcoin exposure. These products include risk management features like principal protection tiers. When market prices fall enough to trigger these thresholds, traders must actively adjust their positions to maintain risk neutrality. While common in traditional equities, Hayes points out that in crypto, this creates feedback loops—selling begets more selling—accelerating price declines.

The delta hedging mechanism works as follows: banks issue structured notes that track Bitcoin prices but offer downside protection (e.g., no more than 20% loss). To hedge this risk, banks hold a certain proportion of Bitcoin spot. When Bitcoin’s price drops, they sell some Bitcoin to stay risk-neutral. This additional selling pushes prices lower, triggering more hedging sales from structured products, creating a vicious cycle.

“I will compile a complete list of all structured notes issued by banks to better understand the triggers for rapid price swings,” Hayes writes. Such systemic research, if completed, would provide important transparency to the market. Knowing which price levels trigger large-scale hedging sales allows better risk management and opportunity identification.

However, Hayes clarifies he does not believe in a “secret conspiracy” causing market crashes. He emphasizes that these derivatives do not inherently cause volatility but amplify existing swings. He adds that markets should be glad there’s no government bailout, allowing leverage to unwind naturally. Although painful, this free-market liquidation process is healthy; it weeds out over-leveraged participants and lays the groundwork for the next bull run.

Pantera Counters Asian Yen Arbitrage Collapse Theory

Conversely, Pantera Capital’s Franklin Bi attributes the crash to a distressed Asian entity unwinding leveraged positions financed through yen arbitrage trades. These theories collectively suggest that Bitcoin’s volatility is increasingly driven by complex institutional trading strategies rather than retail sentiment.

As background, Pantera’s general partner Franklin Bi blames the volatility on a distressed non-crypto entity, not a typical industry fund. Bi suspects the seller is a large Asian-based corporation. Reports indicate this entity avoided early detection by market observers because it lacked deep ties to native crypto trading counterparts.

According to Bi, this entity likely engaged in leveraged market-making on major exchanges, funded by yen arbitrage. Yen arbitrage involves borrowing low-interest yen, converting to other currencies, and investing in higher-yield assets. When the yen appreciates or market volatility spikes, these leveraged positions are forced to unwind, triggering a chain reaction. The August 2024 “yen arbitrage unwind” caused significant turmoil in global equities and crypto markets, and Bi believes similar mechanisms could recur.

Though Hayes’s and Bi’s theories differ in focus, they both point to a common conclusion: Bitcoin’s volatility is increasingly influenced by sophisticated institutional trading strategies rather than retail activity. This shift signals market maturity but also introduces new risks. Retail buying and selling are relatively dispersed and predictable, while institutional leverage and risk management can trigger systemic chain reactions at critical moments.

This commentary comes amid a turbulent week in crypto markets. Bitcoin recently posted its worst single-day performance since the FTX collapse in November 2022. Meanwhile, other market participants attribute the decline to broader macroeconomic headwinds or even concerns over quantum computing security. The diverse explanations reflect a lack of consensus on the crash’s cause, with multiple factors at play.

For retail investors, Hayes and Bi’s analyses reveal a harsh reality: we are competing against institutional players with more information, better technology, and deeper pockets. When structured product hedging or yen arbitrage unwinding triggers occur, retail investors are often the last to know and the first to suffer. This underscores the importance of risk management—setting stop-losses and controlling leverage is more critical than ever in an institutional-dominated market.