Competition Weighs on Hyperliquid ETFs as JPMorgan Signals Slower Investor Demand

JPMorgan said Hyperliquid’s ETF momentum has slowed significantly after attracting strong investor demand in May and June, with rising competition now weighing on future growth prospects.

The bank reported that inflows into Hyperliquid (HYPE) exchange-traded funds have nearly come to a standstill following their earlier surge, reflecting concerns about the decentralized exchange’s ability to sustain its rapid expansion.

Hyperliquid ETFs ranked among the strongest non-bitcoin crypto funds in terms of inflows relative to assets under management during May and June. However, that pace weakened in July and continued to cool into early August, JPMorgan said.

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

Hyperliquid has been one of the standout performers in the crypto sector this year, with the HYPE token benefiting from increased adoption of its decentralized perpetual futures trading platform.

The platform’s rapid growth has pushed it into the ranks of the largest crypto ecosystems outside bitcoin and ether, attracting interest from institutional investors, corporate treasury buyers and ETF issuers.

JPMorgan said decentralized derivatives platforms are facing stronger competition from regulated centralized exchanges, which could limit Hyperliquid’s ability to continue expanding.

The report noted that the launch of U.S.-regulated crypto perpetual futures products may encourage traders to shift activity away from offshore decentralized platforms such as Hyperliquid. These venues continue to face concerns related to licensing, compliance requirements and investor protections.

The analysts also highlighted growing competition in prediction markets, an area Hyperliquid has entered as it looks to diversify beyond perpetual futures trading. Since perpetual contracts generate a significant share of platform fees, maintaining growth in this segment remains important for HYPE’s value proposition.

While JPMorgan recognized Hyperliquid as one of the year’s biggest crypto success stories, the bank said it remains uncertain whether the platform can continue gaining ground against major ecosystems such as Solana and XRP.

The report added that Hyperliquid has become the fourth-largest cryptocurrency held by corporate treasury companies, trailing only bitcoin, ether and solana.

Bitcoin and ether still dominate the crypto ETF market, with approximately $77 billion and $10 billion in assets under management, respectively. ETFs linked to other cryptocurrencies, including Solana, XRP and Hyperliquid, collectively hold only about $2 billion to $3 billion, JPMorgan estimated.

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