Sonnet Soars 78% in Crypto Pivot—What’s Next?

• Sonnet (SONN) surges 78% to $9.24 on a transformative crypto merger announcement
• Business combination with Rorschach values Hyperliquid Strategies at $888M post-closing
• Shares trade between $7.78 and $19.00 intra-day, tripling from 52W low of $1.08

This explosive rally stems from Sonnet’s pivot to become a publicly listed crypto treasury firm via its merger with Rorschach, backed by top crypto investors. The $888M valuation and HYPE token reserves fuel speculation, with technicals showing extreme momentum—RSI at 86.25—while sector peers like Grayscale eye crypto listings.

Crypto Treasury Play Drives Sonnet’s Explosive Surge
The 78% intraday jump is directly tied to Sonnet’s definitive agreement to merge with Rorschach, transforming into Hyperliquid Strategies Inc. (HSI). The deal’s $888M implied value—combining $583M in HYPE tokens and $305M in cash—has electrified markets. Strategic investors like Paradigm and Galaxy Digital validate the play, while the CVR structure preserving biotech assets adds complexity. The HYPE token’s meteoric growth trajectory and institutional demand cited by Matt Huang of Paradigm amplify speculative interest, driving retail and crypto-focused capital into the stock.

Asset Managers Pivot to Crypto—Sonnet Jumps Ahead
Sonnet’s move mirrors broader shifts in asset management, as seen in Grayscale’s confidential IPO filing and Hyperliquid’s rising market cap. While traditional firms like BlackRock (BLK) +0.65% focus on ETFs, Sonnet’s crypto treasury model offers a high-risk, high-reward divergence. The sector’s $33B Grayscale Bitcoin Trust now trails BlackRock’s cheaper IBIT ETF, highlighting execution challenges in crypto asset management. Sonnet’s bold pivot positions it as a disruptor—if regulators approve—the deal could redefine how institutional capital accesses HYPE’s Layer-1 blockchain ecosystem.

Technical Overbought—Focus on Momentum Metrics and Sector Trends
• RSI: 86.25 (deep overbought)
• Bollinger Bands: Upper at $5.81, Middle at $2.37 (price far exceeds upper band)
• MACD: 0.999 vs Signal 0.602 (bullish crossover confirmed)

Technicals suggest exhaustion risks despite strong momentum. Bulls target the $19.00 intraday high (52W peak), while bears watch $7.78 for support. The absence of options data limits contract analysis, but traders should monitor the merger’s regulatory path and HYPE token price action. Aggressive buyers might consider leveraged ETFs like (if available), but current data advises caution near overbought levels.

Potential catalysts include SEC clearance and Hyperliquid’s Q2 token performance—failure to sustain HYPE’s $46 million valuation could trigger retracement. Playbook: Exit on $19.00 break or $7.78 dip, with a close above $9.00 signaling trend continuation.

Backtest Sonnet Stock Performance
The backtest of SONN's performance after an intraday surge of 79% shows mixed results. While the 3-day win rate is high at 41.47%, the 10-day and 30-day win rates are lower at 39.81% and 39.57%, respectively. This suggests that while SONN may experience short-term gains, longer-term performance is more variable.

Watch for Crypto Catalysts—HSI’s Launch Critical
Sonnet’s rally hinges on executing its Hyperliquid strategy—regulatory approval and HYPE’s price stability are non-negotiable. With BlackRock (BLK) +0.65% leading traditional asset management, Sonnet must prove crypto treasuries can deliver consistent returns. Investors should prioritize the merger’s Q3 close and HSI’s Nasdaq listing as confirmation points. Overbought technicals ($9.24 at RSI 86) demand caution, but a sustained breakout above $19.00 would validate this radical biotech-to-crypto transition. Bottom line: Watch for $888M valuation validation—HSI’s first quarter results will be the ultimate stress test.