Bitcoin is crashing, but a new Wall Street crypto hype is on the rise

In a very small and, to date, at least, obscure corner of the crypto market, investors are rushing in rather than heading for the exits. Exchange-traded funds, called HYPE, are acquiring new assets from investors at a time when cryptocurrencies are the leading bets. bitcoin And etherThey are in tank form.

In May, Bitsel and 21shares launched spot ETF tracking indices for HYPE, a decentralized crypto asset running on its own blockchain hyperliquid. Products traded under Ticker BHYP And TİPIt has raised close to $150 million in assets and has had mostly positive net inflow days since its launch; attracted attention Nate Geraci, president of NovaDius Asset Management.

Grayscale launches its own Grayscale Hyperliquid Staking ETF (HYPG) on Wednesday.

“This is a market that has 1% penetration of its potential market. Most people still don’t know what hyperliquid is,” Bitwise chief investment officer Matt Hougan told CNBC.

Hyperliquid is a decentralized perpetual futures exchange built on blockchain. It operates around the clock for traders outside the United States. This situation persisted quietly until last summer, when the US-Iran war sent traders scrambling for weekend access to oil markets. Stephen Coltman, vice president and head of macro at 21shares, said volume is rapidly reaching nearly $1 billion a day in crude oil alone.

For an indicator that most financial advisors and investors had never heard of a month ago, the reaction was hard to ignore, especially at a time when Bitcoin was experiencing a steep sell-off. Spot bitcoin ETFs are hemorrhaging assets. iShares Bitcoin Trust ETF (IBITFor example, it closed the week down around 16%.

HYPE inflows are likely to be a rotation of existing cryptocurrency rather than investors moving towards something truly new.

“Hyperliquid is bringing new investors from outside the crypto ecosystem into this particular digital asset. I think it appeals to a much different type of investor than Bitcoin,” said Zach Pandl, head of research at Grayscale.

Pandl said investors are interested in a revenue model they can understand. Most crypto tokens have an indirect relationship to underlying platform activity, but hyperliquid is different.

“In the case of hyperliquid, 99% of the fees generated on the platform go towards repurchasing the asset, HYPE,” Hougan said. “There is a very tight loop between the activity happening in crypto and the value of the hyperliquid asset,” Hougan said.

It’s a market mechanism that traditional stock investors will immediately recognize: publicly traded companies using their cash to buy back their own shares. “This is very similar to a stock buyback, where the entire trade is created and used to buy back the token,” Coltman said.

ETF experts say these funds are a practical entry point for investors who want exposure without the complexity of setting up a digital wallet or navigating a decentralized exchange.

As of Friday, the newly launched Grayscale Hyperliquid Staking ETF had $4.5 million in assets. The 21shares Hyperliquid ETF has $75.8 million in assets under management, while the Bitwise Hyperliquid ETF has $71.14 million under management.

As investors become more familiar with hyperliquids through ETFs, it’s reasonable to expect the products to accelerate mainstream adoption of the platform, Geraci said.

“I see spot crypto ETFs as an important bridge to TradFi. [traditional finance] and DeFi [decentralized finance]. While it is difficult to determine the degree of overlap between HYPE ETF investors and hyperliquid users, ETFs are undoubtedly increasing awareness of the platform,” he wrote in an email to CNBC.

But ETF experts warned that awareness remains low, competition is widespread and risks are high.

21shares points to its track record by listing a HYPE product in Europe in August 2025. Grayscale has the lowest expense ratio at 0.29%, while 21shares has the lowest expense ratio at 0.30% and Bitwise at 0.34%. Bitwise has strong relationships with family offices.

“Hyperliquid’s biggest challenge may be increased competition from both TradFi and DeFi, a dynamic that a more favorable regulatory environment could intensify,” Geraci wrote.

The platform is not available in the US, but Pandl said his expectation for approval is 2027, calling it “a reasonable timeline for when we can have enough regulatory clarity around decentralized exchanges that US users can start accessing the platform.”

By then the landscape may be much more crowded. The rapid hyper-liquid ETF asset growth story shows what some investors weren’t expecting.

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