Bitwise Files for First-Ever Spot Hyperliquid ETF as Token Price Falls

TLDR

• Bitwise has filed for a spot Hyperliquid (HYPE) ETF with in-kind redemptions
• Competition between perpetual futures DEXs is heating up with Aster surpassing Hyperliquid in volume
• Aster’s 24-hour volume reached $35.8 billion, more than triple Hyperliquid’s $10 billion
• HYPE token price fell 11% to $40.51 with an $11 billion market cap, ranking 21st among cryptocurrencies
• SEC delayed decisions on several altcoin ETF proposals including Canary’s SUI, PENGU, INJ, and SEI funds

Asset manager Bitwise has filed to launch an exchange-traded fund that directly holds and tracks Hyperliquid (HYPE), a token tied to a crypto perpetual futures protocol and blockchain. The regulatory filing was submitted on Thursday according to reports.

The proposed Bitwise Hyperliquid ETF would be the first ETF to offer exposure to HYPE tokens. The filing does not yet identify the exchange where the product would trade, the ticker symbol, or the fees Bitwise plans to charge.

Hyperliquid functions as a Layer 1 blockchain built for decentralized finance applications, with its main focus on perpetual futures trading. HYPE tokens provide discounts on the platform’s decentralized exchange and are used to pay fees on its blockchain.

Perpetual DEX Competition Heats Up

The ETF filing comes at a time when competition between perpetual futures decentralized exchanges has been growing more intense. Aster, a perpetual futures DEX native to the BNB Chain, launched its token earlier this month and has seen trading volume and open interest quickly surge past Hyperliquid.

According to data from DefiLlama, perpetual trading volumes on DEXs hit an all-time high of $70 billion on Thursday. Aster’s volume over a 24-hour period reached $35.8 billion, more than triple Hyperliquid’s $10 billion during the same timeframe.

Open interest in the Aster token reached $1.15 billion on Thursday, a massive jump from under $143 million just days earlier on September 20. In contrast, open interest on the HYPE token fell 1.85% to $2.2 billion.

HYPE’s price has been under pressure, dropping 11% to $40.51 over a 24-hour period. The token has a circulating supply of 270.8 million and a market capitalization of $11 billion, making it the 21st largest cryptocurrency by market cap.

ETF Filing Details and Approval Process

Bitwise’s filing was a Form S-1 to register its ETF with the SEC under the Securities Act of 1933. This allows the product to directly hold cryptocurrency tokens.

The proposed ETF will directly hold HYPE tokens and “seek to provide exposure to the value of Hyperliquid held by the Trust,” similar to the Bitcoin and Ether ETFs that launched last year.

A key feature of the proposed fund is that it will offer in-kind creation and redemptions. This means shares in the fund can be exchanged for actual HYPE tokens instead of cash. The SEC allowed in-kind creation and redemption for crypto products in July, calling it “less costly and more efficient.”

Before launch, the ETF will also need a Form 19b-4 to begin the approval process with the SEC. This process could take up to 240 days before final approval.

SEC Delays on Altcoin ETFs

While Bitwise moves forward with its HYPE ETF filing, the SEC has delayed decisions on several other altcoin ETF proposals. These include Canary’s spot SUI and PENGU funds, along with its staked INJ and SEI funds, as well as spot Avalanche proposals from Grayscale and VanEck.

Earlier this month, the SEC approved generic listing standards for crypto ETFs to speed up approvals. This change allows shorter approval timelines if the underlying asset has been traded for six months on a CFTC-regulated exchange.

However, Bitwise noted in its filing that “there are currently no Hyperliquid futures contracts registered with the CFTC,” which could affect the approval timeline.

The most recent crypto ETF development came when Hashdex expanded its crypto ETF to include XRP and Solana after the SEC recently approved broader listing standards.

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