A sharp downturn in bitcoin and ether prices has not deterred investors from pouring capital into a new class of crypto exchange-traded funds (ETFs) focused on 'hyperliquid' assets. Within days of their launch, HYPE, or hyperliquid, ETFs attracted nearly $160 million in inflows, even as traditional spot bitcoin ETFs like the iShares Bitcoin Trust ETF (IBIT) saw outflows and ended the week down around 16% [1].
The surge in interest centers on ETFs tracking indexes for HYPE, a decentralized crypto asset operating on its own blockchain, hyperliquid. Bitwise and 21Shares launched spot ETFs under the tickers BHYP and THYP in May, raising close to $150 million in assets and experiencing mostly positive net inflow days since inception. Grayscale also entered the market with its Grayscale Hyperliquid Staking ETF (HYPG) [1].
ETF experts attribute the appeal of hyperliquid ETFs to their unique buyback model, which uses platform trading fees to repurchase HYPE tokens, directly linking platform activity to token value. This model stands in contrast to most crypto tokens, which typically have an indirect relationship with underlying platform activity. Zach Pandl, Grayscale's head of research, noted that hyperliquid is attracting a different type of investor, including those from outside the traditional crypto ecosystem, due to its transparent revenue model [1].
Hyperliquid itself is a decentralized perpetual futures exchange that operates around the clock for traders outside the United States. Its trading volume surged to roughly $1 billion a day in crude oil alone following last summer's U.S.-Iran war, which drove demand for weekend access to oil markets, according to Stephen Coltman of 21Shares [1].
Despite the broader crypto market downturn, the inflows into HYPE ETFs are seen as a move into a genuinely new asset class rather than a rotation out of existing crypto holdings. Matt Hougan, Bitwise's chief investment officer, emphasized that the market for hyperliquid is still in its infancy, with only 1% penetration into its potential market [1].
CONCLUSION
While bitcoin and ether ETFs are experiencing significant outflows amid a broader crypto selloff, hyperliquid ETFs have quickly attracted substantial investor interest and capital. The unique buyback model and transparent link between platform activity and token value are drawing new types of investors, suggesting that hyperliquid could represent a new frontier in crypto investing.