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

In one very small, and at least to date obscure, corner of the crypto market, investors are rushing in rather than heading for the exits. So-called HYPE exchange-traded funds are taking in new assets from investors at a time when the leading crypto bets, including bitcoin and ether, are tanking.

In May, Bitwise and 21shares launched spot ETFs tracking indexes for HYPE, a decentralized crypto asset that operates on its own blockchain, hyperliquid. The products, which trade under the tickers BHYP and THYP, have raised close to $150 million in assets and since launch have mostly experienced positive net inflow days, something that caught the attention of Nate Geraci, president of NovaDius Wealth Management.

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

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

Hyperliquid is a decentralized perpetual futures exchange that is built on blockchain. It operates around the clock for traders outside the United States. It existed quietly until last summer, when the U.S.-Iran war sent traders scrambling for weekend access to oil markets. Volume quickly reached roughly $1 billion a day in crude oil alone, said Stephen Coltman, 21shares vice president and head of macro.

For a token most financial advisors and investors had never heard of a month ago, the reception has been hard to ignore, especially at a time when bitcoin is experiencing a steep selloff. Spot bitcoin ETFs have been bleeding assets. The iShares Bitcoin Trust ETF (IBIT), for example, ended the week down around 16%.

The HYPE inflows are less likely a rotation out of existing crypto than a move by investors into something genuinely new.

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

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

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

This is a market mechanism traditional equity investors would recognize immediately: the practice of public companies using their cash to buy back their own shares. “It’s very similar to a stock buyback, where all of the trading is generated and used to buy back the token,” Coltman said.

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

Geraci said as investors become more familiar with hyperliquid through the ETFs, it is reasonable to expect the products could help accelerate mainstream adoption of the platform itself.

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

But the ETF experts cautioned that awareness is still low, competition is widespread, and risks remain high.

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

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

The platform remains unavailable in the U.S., but Pandl said his expectation for approval is 2027, which he called “a reasonable timeline for when we could have sufficient regulatory clarity around decentralized exchanges that U.S. users could begin to access the platform.”

The landscape may be considerably more crowded by then. The rapid hyperliquid ETF asset growth story shows that some investors are not waiting.

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