JPMorgan Warns Hyperliquid ETF Momentum Has Slowed as Rival Products Gain Ground

JPMorgan said demand for Hyperliquid ETFs, which had been among the strongest performers in May and June, slowed significantly in July and early August as competition increased across the crypto market.

Inflows into Hyperliquid (HYPE) exchange-traded funds have nearly stalled after a strong surge earlier in the year, raising questions about the protocol’s ability to maintain its growth momentum, according to JPMorgan.

The bank noted that Hyperliquid ETFs ranked among the leading non-bitcoin crypto funds by inflows relative to assets under management during May and June. However, investor demand weakened throughout July and into the start of August.

“We see significant challenges to the market share of decentralized platforms such as Hyperliquid,” JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a Thursday research note.

Hyperliquid has emerged as one of the biggest crypto success stories of the year, with its HYPE token benefiting from strong demand for the platform’s decentralized perpetual futures exchange.

The protocol’s rapid expansion has helped it become one of the largest crypto ecosystems outside bitcoin and ether, attracting interest from institutional investors, corporate treasury buyers and ETF providers.

JPMorgan analysts said the slowdown in inflows comes as decentralized derivatives platforms face increasing pressure from regulated centralized exchanges.

The report highlighted that the introduction of U.S.-regulated crypto perpetual futures products could draw trading volume away from offshore decentralized platforms like Hyperliquid, which continue to face questions around regulatory approval, compliance standards and investor protections.

The analysts also identified rising competition in prediction markets as another challenge. Hyperliquid has been expanding into this sector as it attempts to diversify beyond perpetual futures trading, a market that currently plays a major role in generating transaction fees and supporting HYPE’s valuation.

JPMorgan acknowledged that Hyperliquid has been one of the strongest-performing crypto projects this year, becoming the fourth-largest asset held in corporate crypto treasuries after bitcoin, ether and solana. However, the bank said it remains uncertain whether the platform can continue gaining market share against major competitors such as Solana and XRP.

Bitcoin and ether continue to dominate the crypto ETF landscape, with approximately $77 billion and $10 billion in assets under management, respectively. By comparison, ETFs linked to other digital assets, including Solana, XRP and Hyperliquid, collectively hold only around $2 billion to $3 billion, according to the report.

HYPE was trading down more than 3% over the previous 24 hours at approximately $55.30.