--- title: HYPE’s Success & MSTR’s Soon-to-Be Failure? description: This week’s Two Satoshis explores how HYPE’s rise is reshaping the way investors think about token economics, while MicroStrategy’s capital structure raises new questions about future BTC sales. image: https://www.ar.ca/hubfs/Two%20sats%20June%2012026.png --- [![email-sig-logowhite](https://www.ar.ca/hs-fs/hubfs/email-sig-logowhite.png?width=102&height=96&name=email-sig-logowhite.png "email-sig-logowhite")](https://www.ar.ca/) [![Get in Touch](https://no-cache.hubspot.com/cta/default/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3.png)](https://cta-redirect.hubspot.com/cta/redirect/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3) ** ** ** [![Arca](https://www.ar.ca/hs-fs/hubfs/arca_square_576x576.png?width=60&height=30&name=arca_square_576x576.png "Arca")](https://www.ar.ca/) [![Get in Touch](https://no-cache.hubspot.com/cta/default/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3.png)](https://cta-redirect.hubspot.com/cta/redirect/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3) ** ** ** Search **Menu** ** ** [![Data Room](https://no-cache.hubspot.com/cta/default/4536350/72e2934a-0f70-4634-897e-b99fd4807a9b.png)](https://cta-redirect.hubspot.com/cta/redirect/4536350/72e2934a-0f70-4634-897e-b99fd4807a9b) [![Get in Touch](https://no-cache.hubspot.com/cta/default/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3.png)](https://cta-redirect.hubspot.com/cta/redirect/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3) ![](https://www.ar.ca/hubfs/Blog/Thats%20Our%202%20Satoshis/Branding/2-Sats-Header.png) [Market Recap](https://www.ar.ca/blog/tag/market-recap) | # HYPE’s Success & MSTR’s Soon-to-Be Failure? [![Jeff Dorman, CFA](https://www.ar.ca/hubfs/Jeff%20Dorman.png)](https://www.ar.ca/blog/author/jeff-dorman-cfa) Written by [Jeff Dorman, CFA](https://www.ar.ca/blog/author/jeff-dorman-cfa) Jun 1, 2026 ******![Thats Our 2 Satoshis Logo](https://www.ar.ca/hs-fs/hubfs/Thats%20Our%202%20Satoshis%20Logo.png?width=300&name=Thats%20Our%202%20Satoshis%20Logo.png)****** ![WOW Screenshot 2026-06-01 150029](https://www.ar.ca/hs-fs/hubfs/WOW%20Screenshot%202026-06-01%20150029.png?width=712&height=468&name=WOW%20Screenshot%202026-06-01%20150029.png) *Source: TradingView, CNBC, Bloomberg, Messari*   **Will Other Non-Crypto Companies Issue Tokens After Seeing HYPE’s Success?**  We’ve talked about Hyperliquid a lot over the past two years… [more than I even remember](https://www.proofofhype.xyz/u/jdorman81). But when a token is up almost 200% YTD, while almost every other token and crypto stock is down YTD, it warrants talking about it again. The outperformance of HYPE is simply tremendous.  ![YTD Returns select tokens](https://www.ar.ca/hs-fs/hubfs/YTD%20Returns%20select%20tokens.png?width=681&height=561&name=YTD%20Returns%20select%20tokens.png) HYPE hitting all-time-highs as the rest of the crypto market does virtually nothing is a great scenario for digital asset markets. Asset classes that show dispersion and have strong rationales for price moves are simply more investable than markets that move up and down together for little reason. Having a single, strong, fundamental outperformance from one of the fastest-growing and most profitable companies in the world shows that crypto investors are becoming more discerning. This comes as little surprise to those of us who focus almost entirely on revenue-producing token issuers with buybacks. We’re probably more surprised that it has taken so long for HYPE (and other amortizing tokens) to separate from the pack. There are only a handful of token issuers with deflationary token supplies – meaning revenues/buybacks outpace inflation/emissions/unlocks. If crypto market participants weren’t so jaded by BTC’s 1-in-a-million success and the 2021 bubble, it would seem obvious that these types of tokens would outperform inflationary tokens. ![Net Tokens Value Flows](https://www.ar.ca/hs-fs/hubfs/Net%20Tokens%20Value%20Flows.png?width=470&height=742&name=Net%20Tokens%20Value%20Flows.png) [*Source: X/Twitter *](https://x.com/wagmiAlexander/status/2058978591807873512?s=20)  Moreover, with the advent of Hyperliquid Treasury companies (like PURR) and the recently launched HYPE ETFs, non-crypto market participants are finally becoming educated about HYPE. While many crypto-native investors are still hoping for 100x returns by throwing darts at microcap fliers with little to no value accrual mechanism, or the umpteenth L1 or L2 token, traditional investors who care about cash flows are finding HYPE to be a much easier story to understand, and far easier to underwrite as a long investment. ![Matt Hougan Tweet](https://www.ar.ca/hs-fs/hubfs/Matt%20Hougan%20Tweet.png?width=536&height=146&name=Matt%20Hougan%20Tweet.png) [*Source: Bitwise Twitter/X *](https://x.com/Matt_Hougan/status/2059420265772417180?s=20)  The problem with replicating HYPE’s success is that it isn’t easy for a crypto-startup to generate billions of dollars in revenue as quickly as Hyperliquid has, let alone do so while being entirely self-funded by its founders. While it seems obvious in retrospect that Hyperliquid’s token launch, airdrop, and tokenomics model are superior to most other tokens, that doesn’t mean other startups can necessarily do the same. But you know who can? Traditional, non-crypto companies that already have permanent funding and billions of dollars in cash flows. What’s stopping Disney, Netflix, Spotify, ESPN, and hundreds of other companies from issuing their own token? Tokens have proven to be, when issued correctly, like HYPE, one of the greatest capital formation and customer bootstrapping mechanisms ever created, instantly turning customers into power users and evangelists for life. As we [wrote over a year ago](https://www.ar.ca/blog/12-crypto-hills-i-will-die-on): *"We are on the cusp of leaving the "dot-crypto" phase of blockchain. We are about to enter a new phase where regular, 100-year-old companies use blockchain. No company is a "dot-com" anymore, because every company is, and it would make no sense to still call a company a “dot-com”. The same will be true in crypto. All of the existing crypto use cases are from crypto-native companies, but going forward, the whole world will come up with creative ways to use tokens. **Every company, university, municipality, organization, and sports team will issue REAL tokens one day (not memecoins). I call on every investment banker to help construct better tokens (or since this is unrealistic, I call on every potential token issuer to call Arca). There is a better way to do this!”* *![Mark Cuban Tweet](https://www.ar.ca/hs-fs/hubfs/Mark%20Cuban%20Tweet.png?width=412&height=562&name=Mark%20Cuban%20Tweet.png)* This eventuality should be even closer now that the whole world is watching HYPE. **Did MSTR Sell BTC?** I’ve written a lot about Strategy (MSTR) over the years as well. While our historic view mostly centered around trying to calm markets about [misinformation](https://x.com/jdorman81/status/1403068146110455811?s=20) related to MSTR getting liquidated and [being a forced seller](https://x.com/jdorman81/status/1895215457902436747?s=20) of its Bitcoin, more recently, we’ve changed our tune as the [capital structure changed](https://www.ar.ca/blog/the-strategy-mstr-end-game-may-be-closer) (for the worse). While they will still never be forced sellers, they could become voluntary sellers, and that may even be worse. In our opinion, the MSTR story is now pretty out of hand. Strategy could have sat and done nothing for a long time with its old capital structure (a debt-light capital structure with no bond covenants). Strategy [would have become a boring company](https://x.com/jdorman81/status/1990190389039653173?s=20) (few BTC buys, no BTC sells), but it would at least have been sustainable while they hoped Bitcoin would rise. However, over the past year, MSTR has issued billions of dollars of preferred stock (over $15 bn), and these preferreds now [carry over $1.7 bn per year in annual cash dividend obligations](https://www.strategy.com/). To take on this large of a cash burn, MSTR had to be thinking 1 of 2 things: 1. Bitcoin was about to moon. I’m not sure what Saylor saw to think that (4-year cycle, flows, ???), but that's the only reason one would take that large of a miscalculated risk and increase expenses that fast. He must have thought BTC was about to fly, and he could easily pay the preferred dividends with future BTC sales. 2. He has every intention of buying as much BTC as he can until the well runs dry, and then he will simply stop paying the dividends. STRC, the 11.5% cash coupon preferred that is being marketed as a safe “money market,” would get slaughtered in this scenario. But then Bitcoin started falling, and the market grew concerned that MSTR would not be able to meet the annual cash dividend needs, so MSTR raised ~$2 bn in cash via stock sales just to ease near-term default concerns — that bought him almost 2 years of runway to pay dividends. Smart move. Again, at this point, MSTR could have chilled for a while, and even though MSTR now has [every stakeholder pinned against each other](https://x.com/jdorman81/status/2034297093360406896?s=20), there was at least no near-term risk. He had two years of cash cushion. Rest easy. But then, for some unknown reason, MSTR decides to take that cash buffer and buy back the $1.5 bn 2029 maturity convertible bonds instead of using this cash to fund the annual dividends. The buyback was at a slight discount, so it's at least mildly accretive to MSTR, but this is a [baffling decision](https://x.com/bccponzi/status/2059874599441973583?s=20) for a company with annual cash flow problems. Why pay off 0% coupon debt with the only cash you have?   MSTR is now in a real predicament: - Sell more MSTR stock at levels that are not accretive (<1.26 mNAV). This is obviously bad for MSTR shareholders, but could be good for BTC and STRC. - Stop paying the dividend on STRC, which would be a death sentence for any capital raising in the future. This is the last resort. - Issue more debt? Maybe MSTR is going to refinance those converts with new, longer-dated converts? He has sworn off debt, so I doubt it, but that would at least logically make sense. - Sell BTC, which he will have to do eventually, but if he does this while BTC is cratering amidst massive ETF outflows, it could crush BTC even further, and MSTR will likely fall too. In fact, we may find out before most of you read this that he did, in fact, sell BTC this past week (which may be partially why BTC has been trading so poorly, and why ETFs have been large net sellers). On Monday, we will get the weekly update from MSTR that may tell us they sold Bitcoin last week. In fact, if you really want to go down a [well-researched rabbit hole,](https://x.com/BTCBeliever21/status/2058648614390374468?s=20) there was a trade to make on Polymarket about when and if Saylor would sell BTC before May 31st (which, up until they bought back the converts, seemed like a long shot). ![Polymarket MicroStrategy chart](https://www.ar.ca/hs-fs/hubfs/Polymarket%20MicroStrategy%20chart.png?width=566&height=360&name=Polymarket%20MicroStrategy%20chart.png) *Source: *[*Polymarket*](https://polymarket.com/event/microstrategy-sell-any-bitcoin-in-2025) All signs have been pointing towards this for the past two weeks. ![Bitcoin strategy image](https://www.ar.ca/hs-fs/hubfs/Bitcoin%20strategy%20image.png?width=445&height=736&name=Bitcoin%20strategy%20image.png) Now, mathematically, selling BTC is no big deal. MSTR can sell a little bit every month, less than it is buying, just to satisfy the dividends. As long as Saylor is a net buyer, who cares if he sells right? But from a sentiment standpoint, how do you think the average Bitcoin investor is going to react when every major news outlet and social media influencer starts writing that “MicroStrategy is now a seller of BTC”? This company has bought over $50 bn of Bitcoin, and currently owns roughly 4% of the total 21 million outstanding. Meanwhile, the price of Bitcoin is BELOW MSTR’s average cost. Many argue that MSTR has single-handedly kept BTC afloat for years. So when they become a seller, even if they are still a net buyer, I fear the headlines. “Buy more BTC than you sell” is a nice story, but “Saylor is selling BTC” is a terrifying headline. ![Cointelegraph image](https://www.ar.ca/hs-fs/hubfs/Cointelegraph%20image.png?width=543&height=261&name=Cointelegraph%20image.png) We’ll likely find out more this week. But this is the first time that [MSTR, Bitcoin, and MSTR preferred holders are really in a bind](https://x.com/richwgalvin/status/2060226623077794053?s=20). One or more of these stakeholders could lose badly here, and it could be coming to a head in the next 6 months (if not sooner). ***And That’s Our Two Satoshis!***   *Thanks for reading everyone! Questions or comments, just let us know.*   **The Arca Portfolio Management Team** *Jeff Dorman, CFA - Chief Investment Officer* *Katie Talati - Director of Research* *Sasha Fleyshman - Portfolio Manager* *David Nage - Portfolio Manager* *Wes Hansen - Director of Trading and Operations* *Alex Woodard - Associate, Research* *Christopher Macpherson - Research Analyst* *Andrew Masotti - Associate, Trading and Operations* *Joey Reinberg, Associate, Trading and Operations*     **To learn more or talk to us about investing in digital assets and cryptocurrency** **call us now at [(424) 289-8068](tel:+14242898068).** ### Subscribe For the Latest Blockchain News & Analysis     Disclaimer: The views expressed here are those of the author, and is not investment advice. This commentary is provided as general information only and is in no way intended as investment advice, investment research, legal advice, tax advice, a research report, or a recommendation. Any decision to invest or take any other action with respect to any investments discussed in this commentary may involve risks not discussed, and therefore, such decisions should not be based solely on the information contained in this communication. Please consult your own financial/legal/tax professional. Statements in this communication may include forward-looking information and/or may be based on various assumptions. The Arca Funds, its affiliates, and/or clients may hold a position in any investment discussed as part of this communication, where any such investment is based on Arca’s proprietary research analytics. Actual future results or occurrences may differ significantly from those anticipated and there is no guarantee that any particular outcome will come to pass. The statements made in this commentary are subject to change at any time. Arca disclaims any obligation to update or revise any statements or views expressed in this commentary. Past performance is not a guarantee of future results and there can be no assurance that any future results will be realized. Some or all of the information provided  may be based on statements of opinion. In addition, certain information  may be based on third-party sources, which information is believed to be accurate, but has not been independently verified.  This commentary is not intended to be an offer to sell or a solicitation of any offer to buy any securities, or a solicitation to provide investment advisory services. Previous Story [← What's Driving Token Prices? May 27, 2026](https://www.ar.ca/blog/whats-driving-token-prices-may-27-2026) [** ](https://www.ar.ca/blog) Next Story [What's Driving Token Prices? 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