Crypto investment flows are becoming increasingly fragmented, with capital exiting bitcoin and ether ETFs while shifting toward alternative assets such as Hyperliquid’s HYPE and XRP.

Bitcoin ETFs recorded more than $1 billion in outflows last week, extending a broader trend of institutional selling. Ether funds also faced continued redemptions, losing an additional $215 million, according to SoSoValue. The persistent withdrawals from the two largest cryptocurrencies suggest fading demand for broad, large-cap exposure.

However, the data does not point to a full withdrawal from the crypto market.

Instead, investors are reallocating funds into more targeted opportunities. Products tied to Hyperliquid’s HYPE token, issued by Bitwise and 21Shares, attracted $72.38 million in inflows. XRP and Solana ETFs also posted gains, drawing in $22 million and $15.6 million, respectively.

According to Timothy Misir, head of research at BRN, the trend reflects a clear rotation of capital toward emerging narratives while moving away from crowded positions in major assets.

This shift is also evident in price performance. HYPE has surged from $38 to $63 over the past 10 days and is up 59% on the month, far outpacing bitcoin’s roughly 1% gain during the same period.

On the fundamentals side, Hyperliquid continues to build momentum. The platform generated $13.2 million in fees over the past week, ranking fifth overall behind major players such as Tether, Circle, and Pump. Canton Network ranked fourth, although much of its activity was driven by incentives, according to DeFiLlama.

Further upside may come from Hyperliquid’s recent partnership with Coinbase and Circle to integrate USDC as a quote asset, a move expected to boost liquidity and trading volumes.

Analysts say Hyperliquid is increasingly positioning itself as a competitor to traditional trading venues and prediction markets. Since the escalation of the Iran conflict in late February, its HIP-3 market has consistently handled strong volumes in perpetual futures tied to real-world assets such as oil, gold, and U.S. equity indices.

Data from Artemis indicates that Hyperliquid’s fundamentals remain strong, with HIP-3 markets reaching a record $2.6 billion in open interest across RWA perpetuals. Meanwhile, the recently launched HIP-4 outcome markets are still in early stages of growth.

Artemis noted that sectors like equity perpetuals, pre-IPO trading, and prediction markets remain in their infancy, leaving Hyperliquid well positioned to benefit as these markets continue to develop.