Bitwise Investment Advisers, one of the largest players in the cryptocurrency fund market, has officially submitted a prospectus to the SEC for the launch of an ETF tied to the HYPE token from the Hyperliquid ecosystem. This is the first attempt to bring an asset from a young but rapidly developing blockchain platform into the regulated investment space.
Hyperliquid and its role in DeFi
Hyperliquid is an L1 blockchain specifically designed for decentralized finance. Unlike universal networks, the project initially focused on perpetual futures trading. Thanks to this specialization, the platform has earned the trust of active traders and has become associated with high liquidity and aggressive trading volume growth.
Bitwise’s ETF application is an important precedent. Until now, funds have mainly focused on Bitcoin and Ethereum. Now, the token of a project that was recently considered a niche instrument is coming into the spotlight of institutional investors.
HYPE dynamics and market reaction
HYPE chart on the 4-hour timeframe
News of the prospectus filing caused a noticeable movement in prices. Over the past day, HYPE’s price dropped by 11% to $40.51, but later recovered to $45. The market capitalization is estimated at about $11 billion, with 270.8 million tokens in circulation, making HYPE the 21st largest cryptocurrency.
The market reacted ambiguously to the application. Some analysts believe that such a step will legitimize interest in derivative DeFi platforms. Others point to high risks: a fund linked to such an asset could be much more volatile than products based on BTC or ETH.
Comments and expectations
Investor and StockTwits co-founder Howard Lindzon ironically noted in his post:
‘Now madness will be available in real time. The Web2 era was special for venture investors, but today everyone strives to be first and invest in the “next Uber,” forgetting that it is the public markets that offer the best opportunities.’
His comment reflects the general skepticism of part of the venture community. Traditional investors fear that the mass introduction of funds based on volatile altcoins will overheat the market. At the same time, supporters see this as a chance to accelerate institutional adoption of DeFi.
SEC position and new delays
Amid Bitwise’s application, the SEC continued to postpone consideration of other proposals. Funds from Canary based on SUI and PENGU, as well as products with INJ and SEI staking, have been put on hold. In addition, the regulator postponed decision deadlines for spot ETFs on Avalanche, submitted by Grayscale and VanEck.
Today, the SEC is reviewing dozens of applications. Each of them reflects the growing interest in cryptocurrency funds, but the regulator is clearly choosing a gradual approach, avoiding abrupt decisions.
Expanding the range of funds
Earlier the same day, Hashdex announced that it was expanding its fund by including XRP and Solana. This became possible after the SEC approved updated standards for listing cryptocurrency ETFs. Thus, the regulator, although acting cautiously, is gradually opening the door to a wider range of digital assets.
What this means for Hyperliquid and the market
For Hyperliquid, the Bitwise application is a step toward institutional recognition. The project, known among derivatives traders, gets a chance to enter the public market, and HYPE reaches a new level in the cryptocurrency asset chain.
However, challenges remain ahead. First, the SEC may delay consideration or even reject the application. Second, the high volatility of HYPE and the specifics of Hyperliquid as a futures trading platform may alert some institutional investors. Nevertheless, the very fact of the application demonstrates that the DeFi market is gradually penetrating traditional financial structures.
Read more: Hypervault Finance withdrew $3.6 million to Tornado Cash — users suspect a fraudulent project shutdown
