JPMorgan says the strong early demand for spot HYPE exchange-traded funds has faded after two months in which the products led non-bitcoin crypto ETFs on an inflow-to-assets basis.
According to a client note from analysts led by Nikolaos Panigirtzoglou, the funds gathered about $280 million in cumulative inflows through June before turning negative. The bank said July recorded more than $13 million in net outflows, followed by another $29.8 million withdrawn over 12 consecutive sessions through August 3.
A sharp change after May and June
The bank described the slowdown as a break from the pattern seen after spot HYPE ETFs launched in May. In May and June, those funds were attracting capital faster, relative to assets, than any other non-bitcoin crypto ETF category.
JPMorgan said that advantage disappeared in July and had not returned as of its latest note. In the bank's view, the flow reversal marks the point at which launch momentum, new listings and fee competition stopped producing fresh ETF demand.
JPMorgan points to a market structure shift
The analysts did not frame the weaker flows as a broad rejection of Hyperliquid. Instead, they linked the change to rising competition from newly regulated US-based perpetual futures platforms.
That segment barely existed when HYPE ETFs came to market in May, JPMorgan said, but it is now competing directly with decentralized derivatives venues such as Hyperliquid. The bank said it sees significant challenges to the market share of decentralized platforms in that environment.
Diversification efforts face similar pressure
JPMorgan also pointed to Hyperliquid's move into prediction markets through its Outcomes product, which was introduced earlier this year as part of a push to rely less on perpetual futures trading fees.
The bank said that market is also becoming crowded, leaving Hyperliquid exposed to competitive pressure on more than one front. At the same time, JPMorgan treated the protocol's Assistance Fund as a separate support factor for the token. The fund directs about 99% of trading fees into open-market HYPE buybacks, a mechanism the bank said operates independently of Wall Street ETF sentiment.
Institutional momentum met a tougher backdrop
The ETF story had built quickly earlier in the year. In May, Bitwise Chief Investment Officer Matt Hougan argued that the market was undervaluing Hyperliquid by treating it mainly as a crypto derivatives venue rather than as a broader multi-asset trading platform.
Momentum continued into June, when Grayscale's HYPG began trading on Nasdaq with the lowest fee among three competing US HYPE products. That listing came in the same week HYPE reached its all-time high of $75.51. JPMorgan's note suggests that this burst of institutional enthusiasm has since run into a more competitive operating backdrop.
What the flow data may show next
JPMorgan drew a distinction between investors abandoning HYPE altogether and investors becoming more cautious about Hyperliquid's competitive position. Its conclusion was the latter rather than the former.
That leaves the next confirmed test in how Hyperliquid performs as the market absorbs the current rollout of US-regulated perpetual futures venues and the protocol's own prediction-market expansion. JPMorgan indicated that if Hyperliquid maintains share through that adjustment, the recent ETF weakness could look like a correction in expectations; if not, ETF flows may continue to reflect that pressure first.
Source: www.blockhead.co