Inflows into Hyperliquid (HYPE) exchange-traded funds (ETFs) have largely ground to a halt after surging in May and June, reflecting growing concerns over the protocol's competitive outlook, according to Wall Street bank JPMorgan (JPM).
The bank said Hyperliquid ETFs led non-bitcoin crypto funds in inflows relative to assets under management in May and June, though that momentum faded in July and early August.
“We see significant challenges to the market share of decentralized platforms such as Hyperliquid,” analysts led by Nikolaos Panigirtzoglou said in a Thursday report.
Hyperliquid has been one of crypto's biggest breakout stories this year, with its HYPE token surging as traders flocked to the protocol's decentralized perpetual futures exchange.
The rapid growth has turned Hyperliquid into one of the largest crypto ecosystems outside bitcoin and ether, attracting institutional capital, corporate treasury buyers and ETF issuers.
According to JPMorgan analysts, the cooling demand comes as decentralized derivatives platforms face mounting competition from regulated centralized exchanges.
The report said the rollout of U.S.-regulated crypto perpetual futures products could shift trading activity away from offshore decentralized venues such as Hyperliquid, which remain exposed to concerns around licensing, compliance and investor protections.
The analysts also pointed to intensifying competition in prediction markets, an area Hyperliquid is expanding into as it looks to diversify beyond perpetual futures trading, where transaction fees underpin much of the token's value.
The bank cautioned that while Hyperliquid has been one of crypto's standout performers this year, becoming the fourth-largest asset held in corporate crypto treasuries behind bitcoin , ether and solana (SOL), whether it can continue gaining market share against larger rivals such as Solana and XRP remains uncertain.
Bitcoin and ether continue to dominate the crypto exchange-traded fund market with roughly $77 billion and $10 billion in assets under management, respectively, while ETFs tied to other cryptocurrencies, including Solana, XRP and Hyperliquid, collectively account for just $2 billion to $3 billion, the report added.
HYPE was trading more than 3% lower over the last 24 hours, around $55.30.
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