Bitwise Bids for Spot Hyperliquid ETF Amid DEX Competition

In a move reflecting the growing intersection of traditional finance and blockchain innovation, asset manager Bitwise has filed plans to introduce an exchange-traded fund (ETF) that tracks the token associated with the Hyperliquid decentralized exchange (DEX). This initiative marks a significant step toward broader mainstream acceptance of crypto derivatives and on-chain futures, especially as competition heats up among perpetual futures platforms.

Asset management firm Bitwise has initiated a regulatory process to launch an ETF that will directly hold and track the value of Hyperliquid’s HYPE token—a move reflecting the increasing sophistication of crypto investment vehicles. The proposed product aims to mirror the performance of Hyperliquid, a decentralized exchange platform known for its token that offers fee discounts and blockchain-related utility.

The filing, recently submitted to the SEC, does not specify the trading venue, ticker symbol, or fee structure at this stage. However, it underscores the ETF’s intent to provide in-kind creation and redemption capabilities, enabling investors to exchange shares for HYPE tokens directly. This mechanism, authorized by the SEC in July, is designed to make crypto ETFs more efficient and cost-effective.

The venture emerges when perpetual futures DEXs are experiencing heightened rivalry. Earlier this month, Aster, a prominent platform on the BNB Chain, set new records in trading volume, surpassing $70 billion at its peak—more than tripling Hyperliquid’s $10 billion volume in recent days. The platform’s open interest soared past $1.15 billion, evidencing robust institutional and retail activity and positioning Aster as a major competitor.

Meanwhile, the HYPE token’s open interest has slightly declined, down 1.85% over the past 24 hours to approximately $2.2 billion, with its trading price settling at around $42.50. These shifts suggest a highly active market landscape, reflecting both the opportunities and volatility present within blockchain-based derivatives.

The SEC’s recent approval of in-kind redemption features aligns with initiatives to streamline crypto ETF listings and improve liquidity efficiency in the crypto markets. Despite this progress, the filing notes that no Hyperliquid futures contracts are currently registered with the CFTC, indicating potential regulatory hurdles ahead.

As regulators continue to evaluate cryptocurrency investment products, industry participants remain optimistic about integrating decentralized platforms into mainstream finance, bolstered by innovations such as in-kind redemptions and institutional-grade ETFs. The forthcoming approval of Bitwise’s ETF could mark a pivotal milestone in this evolving space.