The Imminent Launch of Bitwise's Hyperliquid ETF: A Strategic Entry Point for Regulated Exposure to HYPE

The U.S. cryptocurrency market is on the cusp of a transformative development with Bitwise's Hyperliquid ETF (ticker: BHYP), a physically backed, staking-enabled exchange-traded fund designed to provide regulated exposure to Hyperliquid's native token, HYPE. As the first U.S. spot ETF for the decentralized exchange (DEX) sector, BHYP represents a pivotal convergence of regulatory progress, market innovation, and institutional-grade infrastructure. With the SEC's approval seemingly imminent, the product's unique structure and alignment with Hyperliquid's explosive growth position it as a compelling gateway for investors seeking to capitalize on the evolving DeFi landscape.

Regulatory Progress: A Clear Path to Approval

Bitwise's Hyperliquid ETF has navigated a critical regulatory milestone with the filing of Amendment No. 1 to its Form S-1 registration statement on December 15, 2025. This update, submitted to the SEC, solidified key details such as the 0.67% annual management fee, the ticker symbol BHYP, and the fund's staking mechanism. According to Bloomberg senior ETF analyst Eric Balchunas, such amendments typically signal an "imminent" launch, as they reflect final preparations for market entry.

The SEC's review timeline, however, has been complicated by a government shutdown that paused regulatory activity from October to mid-December 2025. While this created a backlog of over 900 filings, the SEC has since resumed operations and is prioritizing filings in the order they were received. Given that BHYP's amendment was filed post-shutdown, it is likely to avoid the prolonged delays that plagued earlier submissions. Under normal circumstances, the SEC aims to review S-1 filings within 30–60 days according to industry analysis, suggesting a potential launch window of late December 2025 or early January 2026.

Market Implications: Capturing the DEX Boom

Hyperliquid's meteoric rise in 2025 underscores the ETF's strategic relevance. By June 30, 2025, the platform's Total Value Locked (TVL) had surged to $3.5 billion-a 70.8% year-over-year increase-while its dominance in decentralized perpetual futures trading reached 79% by year-end. The HYPE token, which underpins the platform's governance, saw its value nearly quadruple in Q2 2025. This growth trajectory reflects Hyperliquid's ability to bridge the gap between decentralized and traditional finance through high-performance infrastructure, including its HyperCore order book capable of processing 200,000 transactions per second.

The BHYP ETF's structure is uniquely positioned to leverage this momentum. Unlike traditional spot crypto ETFs, BHYP will stake a substantial portion of its HYPE holdings to generate on-chain yield, offering investors exposure to both price appreciation and passive income. This dual benefit is further amplified by the fund's physical backing-direct ownership of HYPE tokens-eliminating the need for derivatives or leverage, which have historically drawn regulatory scrutiny.

Investment Potential: A Competitive Edge in a Volatile Market

At 0.67%, BHYP's management fee is competitive with other crypto ETFs, such as Bitwise's broader crypto index offerings. The fund's custodial arrangements with Anchorage Digital Bank (for digital assets) and BNY Mellon (for cash and NAV calculations) add a layer of institutional credibility. Additionally, the ETF's creation and redemption mechanism-baskets of 10,000 shares redeemable in either HYPE tokens or cash-enhances liquidity and flexibility for Authorized Participants.

From an investment perspective, HYPE's volatility presents both opportunity and risk. Analysts have projected price targets of $53 by year-end 2025 and $71 by 2026, contingent on overcoming key resistance levels. Institutional backing, including a $1 billion Digital Asset Treasury (DAT) with significant HYPE allocations, further signals confidence in the token's long-term potential. However, challenges remain: HYPE is not listed on major exchanges like Coinbase or Binance as of late 2025, and the ETF's performance will depend on the platform's ability to sustain its market leadership amid competition from projects like Aster and Lighter.

Strategic Considerations for Investors

The BHYP ETF's launch represents a strategic inflection point for investors seeking regulated access to the DEX sector. For institutional players, the fund's staking yield and physical backing address longstanding concerns about transparency and custody. For retail investors, it offers a familiar ETF structure with the innovation of DeFi, mitigating the complexities of direct token management.

Yet, risks persist. Regulatory uncertainties-particularly around the SEC's evolving stance on crypto products-could impact the ETF's long-term viability. Additionally, the inherent volatility of HYPE and the potential for cascading liquidations in the perpetuals market evidenced by a $10.08 billion single-day liquidation in October 2025 necessitate a cautious approach.

Conclusion

Bitwise's Hyperliquid ETF is poised to redefine access to the decentralized exchange sector, combining regulatory compliance with innovative yield generation. As the SEC's review process nears resolution, the product's alignment with Hyperliquid's market dominance and technological advancements positions it as a strategic entry point for both institutional and retail investors. While risks remain, the ETF's structure and the broader growth of the DEX ecosystem suggest that BHYP could become a cornerstone of crypto-allocated portfolios in 2026.