Wall Street giant JPMorgan reported that strong inflows into Hyperliquid (HYPE) exchange-traded funds (ETFs) in May and June have nearly come to a complete halt since July. According to the bank, the slowdown reflects growing concerns about the protocol’s competitive position.
Sharp decline after the May-June peak
According to JPMorgan’s report, Hyperliquid ETFs outperformed all non-Bitcoin crypto funds in May and June when inflows were measured relative to assets under management. However, this momentum largely disappeared in July and early August.
In a report published on Thursday, JPMorgan analysts led by Nikolaos Panigirtzoglou said decentralized platforms such as Hyperliquid face significant challenges to their market share.
Hyperliquid became one of the most closely watched crypto stories of the year as the value of its HYPE token rose rapidly. Investors showed strong interest in the protocol’s decentralized perpetual futures exchange.
This growth turned Hyperliquid into one of the largest crypto ecosystems outside Bitcoin and Ethereum. Institutional capital, corporate treasury buyers and ETF issuers all began directing funds toward the protocol.
Competition from centralized exchanges intensifies
JPMorgan analysts said the cooling demand partly reflects growing competition between decentralized derivatives platforms and regulated centralized exchanges. The launch of regulated crypto futures products in the United States could draw trading volume away from offshore decentralized platforms such as Hyperliquid.
These platforms continue to face uncertainty around licensing, regulatory compliance and investor protection. Regulated alternatives may therefore become more attractive to institutional investors seeking greater legal clarity.
The analysts also highlighted intensifying competition in prediction markets, an area Hyperliquid is exploring as it seeks to expand beyond perpetual futures trading. This segment is particularly important because trading fees remain one of the main factors supporting the token’s value.
HYPE ranks fourth among corporate crypto treasuries
JPMorgan described Hyperliquid as one of the crypto market’s standout performers this year. The bank also said HYPE has become the fourth-largest asset held by corporate crypto treasuries, behind Bitcoin, Ethereum and Solana.
Bitcoin is currently trading at $64,893.33, while Ethereum stands at $1,916.12. Hyperliquid, meanwhile, is trading at $55.92 after falling around 2%.
Despite its strong performance, JPMorgan said it remains unclear whether Hyperliquid can continue gaining market share against larger rivals such as Solana and XRP.
The report also showed that Bitcoin and Ethereum continue to dominate the crypto ETF market. Bitcoin ETFs manage approximately $77 billion in assets, while Ether ETFs hold around $10 billion.
By comparison, ETFs tied to other cryptocurrencies, including Solana, XRP and Hyperliquid, manage only $2 billion to $3 billion combined.
The HYPE token has lost more than 3% over the past 24 hours and is currently trading at approximately $55.30.
Institutional interest still appears strong, but the arrival of regulated products from centralized exchanges could make the coming months more challenging for decentralized platforms. It also remains uncertain whether Hyperliquid’s expansion into new areas such as prediction markets can offset this competitive pressure.
