JPMorgan said Hyperliquid ETF inflows have slowed sharply after a strong performance in May and June, as increased competition raises concerns about the protocol’s future growth potential.
The Wall Street bank noted that demand for Hyperliquid (HYPE) exchange-traded funds has largely stalled following a major influx of investor interest earlier in the year. The slowdown reflects growing uncertainty over whether the decentralized trading platform can continue expanding its market share.
Hyperliquid ETFs were among the leading non-bitcoin crypto funds by inflows compared with assets under management during May and June, according to JPMorgan. However, that momentum weakened significantly through July and into early August.
“We see significant challenges to the market share of decentralized platforms such as Hyperliquid,” analysts led by Nikolaos Panigirtzoglou wrote in a Thursday research report.
Hyperliquid has emerged as one of the strongest crypto performers this year, with the HYPE token benefiting from rapid adoption of its decentralized perpetual futures exchange.
The platform’s fast 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 issuers.
JPMorgan said the decline in inflows comes as decentralized derivatives platforms face increasing competition from regulated centralized exchanges offering similar products.
The bank warned that the introduction of U.S.-regulated crypto perpetual futures markets could redirect trading activity away from offshore decentralized platforms like Hyperliquid. These platforms continue to face challenges surrounding licensing, regulatory compliance and investor safeguards.
The analysts also highlighted rising competition in prediction markets, a sector Hyperliquid has entered as it attempts to diversify beyond perpetual futures trading. The perpetual futures market remains a key driver of transaction fees and plays an important role in supporting the value of the HYPE token.
Despite recognizing Hyperliquid as one of the biggest crypto success stories of the year, JPMorgan said its ability to continue gaining market share from major competitors such as Solana and XRP remains uncertain.
The report noted that Hyperliquid has become the fourth-largest crypto asset held by corporate treasury companies, behind bitcoin, ether and solana.
Bitcoin and ether continue to dominate the crypto ETF market, with approximately $77 billion and $10 billion in assets under management, respectively. Meanwhile, ETFs linked to assets such as Solana, XRP and Hyperliquid collectively represent only around $2 billion to $3 billion in assets.
HYPE was trading near $55.30, down more than 3% over the previous 24 hours.
