JPMorgan analysts led by Nikolaos Panigirtzoglou have linked weakening HYPE ETF flows to mounting competitive pressure on Hyperliquid, as regulated US exchanges expand into perpetual futures and competition intensifies in prediction markets. The bank's conclusions, reported by The Block, come amid a clear reversal in fund demand.

ETF Flows Turn Negative After Strong Launch Period

According to supplied SoSoValue data, HYPE ETFs attracted $293.93 million across seven weekly periods from May 15 through June 26. The week ending June 26 alone brought in $111.36 million.

Inflows then decelerated sharply to $4.32 million and $10.36 million in subsequent weeks before turning negative. Three consecutive weekly outflows followed:

• $7.26 million withdrawn during the week ending July 17
• $8.61 million withdrawn during the week ending July 24
• $14.75 million withdrawn during the week ending July 31

The three completed outflow weeks removed a combined $30.62 million, with redemptions increasing during each successive period. Despite the July reversal, the funds remained approximately $278 million net positive across all completed periods shown. Investors have not unwound their initial positions; rather, ETFs have stopped delivering the steady new demand observed during May and June.

The HYPE funds entered a market already familiar with spot crypto ETFs, following the January 2024 launch of spot Bitcoin ETFs and the subsequent approval of Ethereum equivalents, both of which established that regulated investment vehicles could attract significant new capital to digital assets. The official prospectuses for the Bitwise Hyperliquid ETF and the 21Shares Hyperliquid ETF describe products that obtain exposure by holding HYPE directly. Fund creations can add demand for the token, while sustained redemptions may require holdings to be reduced. ETF flows do not function as a precise short-term price signal; they indicate whether regulated investment products are adding or removing demand outside Hyperliquid's existing on-chain user base.

Regulated Perpetuals Could Narrow Hyperliquid's Advantage

Hyperliquid established its market position by offering continuous perpetual-futures trading, self-custody, and a broad selection of markets through an on-chain exchange. Perpetual futures—contracts with no fixed expiry that use periodic funding payments to align with underlying spot prices—account for the largest share of global crypto derivatives volume and have been offered predominantly by offshore venues operating outside US regulatory jurisdiction. Registered US venues are now entering the same product category.

The Commodity Futures Trading Commission approved the listing of a Bitcoin perpetual contract on a regulated US exchange in May and published a broader framework for reviewing similar products. CFTC product records also list HYPE futures and HYPE perpetual-style futures under the COIN exchange code. Certification does not confirm that these products are already live, liquid, or diverting meaningful volume from Hyperliquid, but it demonstrates that regulated US venues are preparing to compete for direct crypto-derivatives activity.

Crypto-native users may continue to prefer Hyperliquid's custody model, execution, and market selection. Institutions, however, are more exposed to the new competition because many require customer checks, compliance procedures, reporting standards, and established legal protections. Those firms may increasingly obtain perpetual exposure without using a decentralized exchange. Hyperliquid will need to compete on liquidity, pricing, and execution rather than relying primarily on offering products unavailable through regulated US platforms.

Trading Volume Directly Supports HYPE Tokenomics

Exchange activity is tied directly to the token's economics. According to Hyperliquid's official fee documentation, trading fees support community mechanisms rather than being retained by a conventional exchange operator. The Assistance Fund uses part of that revenue to purchase HYPE, with the acquired tokens subsequently burned. This buy-and-burn approach mirrors a model used by several major centralized exchanges that repurchase and remove their native tokens from circulation.

HYPE can therefore receive support from two distinct parts of the ecosystem: regulated funds buying and holding the underlying token, and exchange fees financing purchases through the Assistance Fund.

An ETF slowdown is less damaging while trading volume and fee generation remain strong. The risk would intensify if fund redemptions persisted while regulated competitors simultaneously drew activity away from the platform.

Hyperliquid's existing liquidity gives it leverage over infrastructure partners. JPMorgan has examined the other side of that position in the stablecoin market; a previous analysis explored how Hyperliquid's growth could pressure the economics surrounding USDC. That bargaining power depends on preserving the users, balances, and activity that made access to the platform valuable.

Prediction Markets Require New Liquidity

Hyperliquid's expansion into prediction markets is intended to reduce its dependence on perpetual futures, but it places the platform in another highly competitive sector. Outcome-based contracts could allow users to trade elections, economic releases, and other events alongside related spot or derivatives positions. Prediction markets drew substantial public and trading attention during the 2024 US election cycle, when specialist platforms reported significant volume and mainstream recognition. While that integration may be convenient, specialist prediction platforms already have established brands and liquidity.

Hyperliquid has incorporated outcome assets into its technical architecture, though parts of the related developer interface remain marked as testnet-only. Usage will determine whether the expansion adds economic value. Existing traders dividing the same balances across more contracts would expand the product menu without materially increasing liquidity or fees. Outcomes become more meaningful for HYPE only if they attract participants and capital not already present on Hyperliquid.

Indicators to Watch

The completed ETF result for the week ending August 7 will provide the next data point, though a single positive period would not restore the May–June trend. A clearer assessment will require evidence across multiple areas:

• ETF flows: whether redemptions stabilise and the funds resume attracting consistent new capital
• Trading volume: whether Hyperliquid preserves activity as regulated perpetual products become more widely available
• Fee generation: whether exchange revenue continues supporting meaningful HYPE purchases and burns
• Prediction markets: whether Outcomes attract new users and liquidity rather than reallocating existing balances

July would resemble a post-launch reset if ETF flows stabilise and Hyperliquid maintains its perpetual-futures volume. Continued redemptions alongside falling exchange activity would reinforce JPMorgan's concern by weakening both outside demand for HYPE and the fee mechanism tied to platform usage.

Methodology: This article references supplied SoSoValue weekly HYPE ETF data, The Block's reporting on JPMorgan analysis led by Nikolaos Panigirtzoglou, and official documents from the SEC, CFTC, and Hyperliquid. The underlying JPMorgan client note was not publicly available, so the bank's conclusions are attributed to The Block. Only completed weekly ETF periods through July 31 are used when calculating the reversal.

Disclaimer: This article is provided for informational and educational purposes only and does not constitute financial or investment advice. ETF flows, trading activity, and token burns can change rapidly and do not independently predict the future price of HYPE.