JPMorgan said Hyperliquid ETF inflows, which surged during May and June, have slowed sharply in July and early August as competition in the crypto market continues to increase.
The bank said investor demand for Hyperliquid (HYPE) exchange-traded funds has largely stalled after a strong start to the year, creating concerns over the protocol’s ability to maintain its competitive position.
According to JPMorgan, Hyperliquid ETFs ranked among the top-performing non-bitcoin crypto funds based on inflows compared with assets under management during May and June. However, that momentum weakened as the market entered July and continued into the first weeks of 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 the most notable crypto performers this year, with its HYPE token benefiting from rapid adoption of its decentralized perpetual futures trading platform.
The protocol’s growth has helped it become one of the largest crypto ecosystems outside bitcoin and ether, attracting attention from institutional investors, corporate treasury firms and ETF issuers.
JPMorgan analysts said the recent decline in demand comes as decentralized derivatives platforms face stronger competition from regulated centralized exchanges.
The report warned that the introduction of U.S.-regulated crypto perpetual futures products could redirect trading activity away from offshore decentralized platforms like Hyperliquid. These platforms continue to face challenges related to regulatory oversight, licensing requirements and investor protection concerns.
The bank also highlighted growing competition in prediction markets, an area Hyperliquid has entered as part of its effort to expand beyond perpetual futures trading. Perpetual futures remain a key source of transaction revenue and a major factor supporting the value proposition of the HYPE token.
While JPMorgan recognized Hyperliquid as one of the biggest crypto success stories of the year, it questioned whether the platform can continue expanding its market share as rivals such as Solana and XRP strengthen their positions.
The bank noted that Hyperliquid has become the fourth-largest cryptocurrency held by corporate treasury entities, ranking behind 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. Other crypto ETFs, including those linked to Solana, XRP and Hyperliquid, collectively represent only about $2 billion to $3 billion in assets, according to JPMorgan.
HYPE was trading around $55.30, down more than 3% over the past 24 hours.
