Buckle up, folks, because the market’s throwing us a curveball today, and it’s called Sonnet BioTherapeutics (NASDAQ: SONN)! As of this writing, SONN is screaming higher, with its stock price surging a jaw-dropping 344% in pre-market trading, making it one of the biggest movers on the Nasdaq. What’s got Wall Street buzzing like a beehive? A massive $888 million business combination that’s flipping this biotech’s script from cancer drugs to a cryptocurrency treasury strategy centered on HYPE, the token of the Hyperliquid Layer-1 blockchain. Let’s dive into this wild ride, unpack what it means for traders, and talk about the risks and rewards of jumping into a stock like this—without telling you whether to buy or sell, of course!

The Big News: Sonnet’s Crypto Makeover

Sonnet BioTherapeutics, a company once laser-focused on oncology and its fancy FHAB (Fully Human Albumin Binding) tech, just dropped a bombshell. They’re teaming up with Rorschach I LLC, a new entity backed by heavy hitters like Atlas Merchant Capital and Paradigm Operations, to form Hyperliquid Strategies Inc. (HSI). This new outfit is set to hold a whopping 12.6 million HYPE tokens—valued at $583 million based on recent prices—plus $305 million in cash, for a total deal value of $888 million. That’s not pocket change! When the deal closes, expected in the second half of 2025, HSI will trade on Nasdaq under a new ticker and become a public crypto treasury company.

Why HYPE? It’s the native token of Hyperliquid, a blockchain that’s climbing the ranks—13th largest by market cap as of July 6, 2025, per Forbes. Hyperliquid’s got two main pieces: HyperCore, which handles super-fast trading (think 200,000 orders per second), and HyperEVM, a platform for building smart contracts. This isn’t just some speculative coin; it’s got real tech behind it, and big names like Paradigm, Galaxy Digital, and Pantera Capital are betting on it. Sonnet’s interim CEO, Raghu Rao, called this a “unique and exciting opportunity” to tap into the crypto boom while still keeping their biotech roots alive as a subsidiary of HSI.

Why the Stock’s Going Nuts

Let’s be real: a 344% pre-market spike doesn’t happen because someone found a dollar in the couch cushions. This move is all about the market’s love affair with crypto right now. Companies like MicroStrategy have shown that holding digital assets like Bitcoin in corporate treasuries can send stock prices to the moon, and Sonnet’s betting HYPE can do the same. Posts on X are lighting up, with traders hyped about SONN’s pivot, calling it a game-changer. The deal’s massive scale, plus the involvement of Wall Street titans like Bob Diamond (former Barclays CEO, now Atlas co-founder) as HSI’s chairman, is giving investors serious FOMO.

But it’s not just hype driving this. The deal includes a $5.5 million private placement and a conversion of $2 million in notes, giving Sonnet some cash to keep its biotech work, like the SON-1010 cancer drug, chugging along. Legacy Sonnet shareholders get contingent value rights (CVRs) tied to those biotech assets, so there’s still some skin in the game for the old business. Still, the real juice here is the crypto angle—98.8% of HSI will be owned by Rorschach and new investors, leaving just 1.2% for Sonnet’s current shareholders. That’s a big shift, and the market’s eating it up.

The Rewards: Why Traders Are Excited

So, why’s everyone losing their minds over SONN? First, there’s the crypto fever. HYPE’s rise to the 13th-largest cryptocurrency by market cap shows it’s got legs, and Sonnet’s plan to build one of the biggest HYPE treasuries in the U.S. is a bold play. If HYPE’s value keeps climbing, HSI could be sitting on a goldmine, and shareholders could see serious gains. The involvement of big-name investors like Paradigm and Galaxy Digital adds credibility—those folks don’t throw money at just anything. Plus, the cash infusion from the deal gives HSI room to buy even more HYPE, potentially amplifying returns if the token’s price skyrockets.

Then there’s the biotech kicker. Sonnet’s not ditching its cancer drugs entirely; it’ll keep developing SON-1010 as a subsidiary. Recent trial data showed a 44% tumor reduction in one patient, which is promising. If they can land a partnership or get closer to FDA approval, those CVRs could pay off for shareholders, giving you a two-for-one bet: crypto upside plus biotech potential.

The Risks: Why You Should Pump the Brakes

Now, let’s not get carried away. This stock’s moving faster than a jackrabbit on a sugar rush, and that comes with big risks. First, crypto is volatile—HYPE could soar, or it could crash hard. If the token’s price tanks, that $583 million treasury could shrink faster than your phone battery on a road trip. Other companies, like MicroStrategy, have faced heat when crypto prices dip, and Sonnet’s no exception. A Standard Chartered report noted that some crypto treasury firms are underwater on their holdings, which could force sales and tank the stock.

Then there’s the dilution. Legacy Sonnet shareholders are getting just 1.2% of HSI—talk about a tiny slice of the pie. That means the crypto upside might not translate to big gains for current SONN holders. Plus, Sonnet’s been in hot water with Nasdaq, getting a delisting notice in June 2025 for low stockholder equity ($662,262 vs. the required $2.5 million). They’ve got until July 14, 2025, to submit a compliance plan, but there’s no guarantee they’ll pull it off. If they get delisted, liquidity could dry up, and the stock could take a hit.

And don’t forget the biotech side. While SON-1010 looks promising, clinical trials are a gamble. Regulatory hurdles, competition, or bad trial results could stall progress, and those CVRs might end up worthless. Sonnet’s financials aren’t exactly rosy either—negative EBITDA of $13.77 million and a net loss of $3.2 million last quarter show they’re burning cash fast.

What This Means for Traders

This is a classic high-risk, high-reward setup. SONN’s pivot to crypto is like a biotech nerd putting on a leather jacket and jumping on a Harley—it’s bold, it’s flashy, but it’s not without danger. For traders, this kind of move screams volatility, which can be a goldmine for day traders or a heartbreaker for long-term investors. Stocks like SONN can surge on news but crash just as fast when the hype fades. Just look at SharpLink, which spiked to $40 on an Ethereum treasury announcement but sank back to $9 when the dust settled.

If you’re playing this stock, you need to stay glued to the market. Volatility means opportunities, but it also means you could get burned if you’re not paying attention. Tools like daily stock alerts can help you keep up with the action—tap here to sign up for free SMS alerts from Bullseye Option Trading to stay in the loop on market movers. These alerts won’t tell you what to do with SONN specifically, but they’ll keep you in the know on big market swings.

The Bigger Picture: Crypto in Corporate Treasuries

Sonnet’s not alone in this crypto craze. Companies like Lion Group Holding and Eyenovia are also piling into HYPE, with Lion securing $600 million for an Asian treasury and Eyenovia aiming to be the first U.S. public company with a HYPE reserve. This trend’s picking up steam because crypto offers a way for companies to diversify away from cash or bonds, which barely keep up with inflation. But it’s a tightrope walk—crypto’s volatility can make or break a company’s balance sheet, and investors need to weigh that carefully.

For traders, this is a reminder that the market loves a good story. Sonnet’s pivot is a textbook catalyst—big news, big names, and big potential. But as Tim Bohen from StocksToTrade says, “A consistent trading routine beats sporadic action every time.” You’ve got to watch the charts, track the news, and know your risk tolerance. Sonnet’s stock might be soaring today, but the road ahead’s got plenty of twists and turns.

Wrapping It Up

Sonnet BioTherapeutics is stealing the show today with a 344% pre-market surge, and it’s all thanks to their $888 million pivot to a HYPE crypto treasury. It’s a gutsy move that could pay off big if HYPE keeps climbing and their biotech assets deliver. But with crypto’s wild swings, a tiny shareholder slice, and Nasdaq breathing down their neck, this is no slam dunk. Traders, keep your eyes peeled, your wits sharp, and maybe check out those free SMS alerts to stay ahead of the game… The market’s a wild place, and Sonnet’s proving it today!