Hyperliquid Faces Growing Competition and Stalling Inflows

JPMorgan analysts have issued a warning about Hyperliquid's market share, citing growing competition from regulated U.S. platforms and intense competition in prediction markets.

The analysts, led by managing director Nikolaos Panigirtzoglou, said that the launch of U.S.-regulated crypto perpetual futures products could accelerate a shift in liquidity away from offshore and decentralized venues to onshore venues.

Hyperliquid has expanded into prediction-style markets with its 'Outcomes' product, but this move may not be enough to stem the tide of competition. The analysts noted that Hyperliquid's value is closely linked to activity on its platform, particularly fees generated from perpetual futures trading.

The analysts also pointed out that inflows into Hyperliquid exchange-traded funds have stalled after recording significant gains in May and June. This trend differs from the wider crypto ETF market, which saw heavy outflows in those months before returning to small inflows in July and August.