TLDR
- Asset manager Bitwise submits first-ever ETF proposal targeting Hyperliquid’s HYPE token to SEC
- HYPE cryptocurrency drops 11% to $40.51 despite maintaining $11 billion market capitalization
- Competitor Aster DEX platform surpasses Hyperliquid with $35.8 billion in 24-hour trading volume
- SEC delays decisions on multiple crypto ETF applications including SUI, PENGU, and Avalanche proposals
- New ETF would offer direct token exposure through in-kind redemption mechanism for institutional investors
Asset management firm Bitwise has filed the first exchange-traded fund application to track Hyperliquid’s HYPE token, marking a new chapter in crypto ETF expansion. The S-1 registration with the Securities and Exchange Commission targets the Layer 1 blockchain’s native cryptocurrency.
Hyperliquid operates as a decentralized finance platform focused on perpetual futures trading. The blockchain network processes derivatives transactions without traditional intermediaries, competing directly with centralized exchanges.
The HYPE token serves multiple ecosystem functions including trading fee discounts and blockchain transaction payments. Token holders benefit from reduced costs when using the platform’s various DeFi services.
Market data shows HYPE trading at $40.51 following an 11% decline over 24 hours. Despite recent price volatility, the cryptocurrency maintains a substantial $11 billion market capitalization with 270.8 million tokens in circulation.
DEX Trading Volume Reaches Record Highs
Competitive pressure in decentralized derivatives trading has intensified dramatically. Aster, a BNB Chain-native perpetual futures platform, processed $35.8 billion in 24-hour volume compared to Hyperliquid’s $10 billion during the same period.
Total trading volume across decentralized exchanges hit an all-time high of $70 billion Thursday. This surge reflects growing institutional interest in onchain derivatives products as traditional finance embraces DeFi infrastructure.
Aster’s open interest jumped to $1.15 billion from under $143 million within days. The rapid growth demonstrates how quickly market dynamics can shift in the competitive DEX landscape.
Hyperliquid’s open interest declined 1.85% to $2.2 billion during recent trading sessions. The platform previously held the leading position in decentralized futures trading before facing increased competition.
Regulatory Approval Process Begins
Bitwise’s ETF proposal includes standard institutional features like in-kind creation and redemption mechanisms. Investors could exchange fund shares directly for HYPE tokens rather than cash settlements.
The SEC approved in-kind redemption structures for cryptocurrency ETFs in July. Regulators described these mechanisms as more cost-effective and operationally efficient for market participants.
Multiple regulatory filings remain necessary before launch. Bitwise must submit Form 19b-4 to initiate the formal SEC review process, which can extend up to 240 days for approval.
Market Context Shows Mixed Signals
The filing occurs during a period of regulatory uncertainty for altcoin ETFs. The SEC delayed decisions on several competing applications including Canary’s SUI, PENGU, INJ, and SEI fund proposals.
Grayscale and VanEck face similar delays for their Avalanche ETF applications. Dozens of crypto-related fund proposals currently await regulatory review at the commission.
Recent approvals provide some optimism for the sector. Hashdex successfully expanded its existing crypto ETF to include XRP and Solana following updated SEC listing standards.
The Bitwise filing notes that Hyperliquid futures contracts do not currently trade on CFTC-regulated exchanges. This regulatory gap could complicate the approval timeline under recent SEC guidance for cryptocurrency ETFs.
Trading competition among perpetual futures platforms continues intensifying as institutional adoption grows. The outcome of Bitwise’s application could influence future ETF filings targeting DeFi-focused cryptocurrencies and blockchain networks.
