JPMorgan Says Regulated Exchanges Threaten Hyperliquid ETF Growth

The momentum Hyperliquid (HYPE) exchange-traded funds (ETFs) had in May and June faded in July and early August, CoinDesk reported Thursday (Aug. 6), citing a report from JPMorgan.

Inflow into HYPE ETFs have “largely ground to a halt” after leading non-bitcoin crypto funds in inflows compared to assets under management in May and June, the report said.

JPMorgan analysts attributed the slowdown to the growing competition all decentralized derivatives platforms face from regulated centralized exchanges, according to the report.

As U.S.-regulated crypto perpetual futures products are rolled out, offshore decentralized venues like Hyperliquid could lose trading activity to the new offerings, the analysts said, per the report.

It was reported in June that HYPE ETFs were attracting attention and taking in new assets from investors even as the price of bitcoin was falling.

In May, Bitwise and 21shares introduced spot ETFs tracking indexes for HYPE, and by early June the products had taken in around $150 million in assets and had mostly experienced positive net inflow days.

Hyperliquid had been virtually unknown until the U.S. war on Iran, when it attracted investors who wanted access to oil markets on the weekends.

It was reported June 1 that the Commodity Futures Trading Commission (CFTC) cleared the way for Coinbaseand Kalshi to offer perpetual cryptocurrency futures contracts to U.S. investors, marking a significant expansion of the domestic crypto derivatives market.

Perpetual futures have become a dominant source of trading volume in global crypto markets but had largely operated outside the United States though offshore exchanges.

Coinbase and Kalshi announced May 29 that they would introduce perpetual futures products following CFTC approval.

Industry advocates argue that providing a regulated domestic venue will allow U.S. institutions and retail investors to access products that previously required dealing with offshore exchanges that often operated with less regulatory transparency.

After launching the country’s first perpetual futures contracts for crypto trading in May, Kalshi began seeking permission from the CFTC to launch those offerings in other classes.

Coinbase reported July 30 that it is seeing adoption across perpetual futures, prediction markets and stock trading as it increases the number of financial products on its platform.