JPMorgan said the strong demand that pushed Hyperliquid ETFs higher in May and June has faded, with inflows slowing in July and early August as competition across the crypto market intensifies.

The bank said investment flows into Hyperliquid (HYPE) exchange-traded funds have nearly stalled after a rapid rise earlier this year, raising concerns about the decentralized platform’s ability to maintain its momentum.

According to JPMorgan, Hyperliquid ETFs were among the top-performing non-bitcoin crypto funds when comparing inflows against assets under management during May and June. However, investor interest weakened as the market moved into July and August.

“Decentralized platforms such as Hyperliquid face notable challenges in protecting their market share,” analysts led by Nikolaos Panigirtzoglou said in a Thursday report.

Hyperliquid has been one of the biggest crypto success stories of the year, with its HYPE token benefiting from growing usage of its decentralized perpetual futures exchange.

The platform’s rapid expansion has helped it become one of the largest crypto networks outside bitcoin and ether, drawing attention from institutional investors, corporate treasury companies and ETF providers.

JPMorgan said the recent slowdown reflects increasing competition from regulated centralized exchanges entering the crypto derivatives market.

The report suggested that the introduction of U.S.-regulated crypto perpetual futures products could pull trading volume away from offshore decentralized platforms like Hyperliquid. These platforms continue to face concerns around regulatory oversight, compliance standards and investor protection measures.

The analysts also pointed to stronger competition in prediction markets, where Hyperliquid has been expanding as it seeks to reduce its reliance on perpetual futures trading. Perpetual contracts remain a major source of platform fees and a key factor behind the HYPE token’s valuation.

Although JPMorgan acknowledged Hyperliquid’s impressive growth this year, the bank questioned whether the platform can continue taking market share from larger ecosystems such as Solana and XRP.

Hyperliquid has become the fourth-largest cryptocurrency held by corporate treasury entities, ranking behind bitcoin, ether and solana, according to the report.

Bitcoin and ether continue to dominate the crypto ETF sector, holding around $77 billion and $10 billion in assets under management, respectively. By comparison, ETFs linked to Solana, XRP and Hyperliquid together account for only about $2 billion to $3 billion in assets.

HYPE was trading at roughly $55.30, down more than 3% over the past 24 hours.