Key Insights: No Cover to Ease

BTC open interest fell −1.24% to $55.17B, peaking at $57.17B on Tuesday before drifting lower into the weekend, while ETH open interest built the other way, rising +2.38% to $31.46B from a Monday base of $30.73B. Funding stayed positive on both through all seven days, well clear of the negative regime that ran through April, but BTC funding compressed from a 0.0083% peak midweek to 0.0029% by Sunday as longs thinned into a flat tape. ETH funding held firmer at 0.0052%. The marginal derivatives bid is leaning long but lightly, and the week’s build accrued to ETH as BTC open interest faded. The spot ETF bid stepped back for a second straight week.

Bitcoin ETFs shed −$1.256B after −$995.5M the week prior, taking the two-week outflow past $2.2B and unwinding part of the April-May inflow run that carried spot off its lows. Ethereum products lost −$216M, broadly matching the prior week’s $255.2M, while Solana funds again bucked the trend with a small +$15.6M. The flows line up with the macro tape, where a firm dollar and a second week of rising yields left allocators little reason to add. The passive bid that absorbed distribution through the spring has gone quiet, leaving the spot floor resting on prior accumulation rather than new demand.

Beneath a flat tape, the sectors pulled hard in both directions. Decentralised exchanges led at +28.4%, carried by HYPE +37.5% and ASTER +8.6%, while AI added +12.5% on NEAR +60.5% and privacy gained +14.5% as ZEC ran +24.4% alongside ARRR +62.0%. The majors went the other way, with Layer 1s down −1.1% on XRP −3.9% against a flat BTC, and memecoins the worst at −5.7% led by DOGE −6.0%. RWAs sat flat at +0.4%. The bid concentrated in a few narratives, perps, AI, and privacy, while broad beta and the speculative tail sat out.

Our Take: The selective bid is now doing all the work. With the ETF complex in outflow and BTC pinned, capital is concentrating in the names that move on their own catalysts, HYPE into its new ETF wrappers, NEAR and the AI complex, and privacy led by ZEC. We read this as rotation inside crypto, capital moving between narratives while total risk appetite stays flat. The test is whether this leadership holds through a BTC move, since a clean break tends to drag the whole tape with it. The strength in HYPE, NEAR, and ZEC is the early signal for what leads once the macro overhang lifts.

Stablecoin lending rates diverged on the week. USDC supply APY across Aave and Compound rose to 3.85%, up +13.0% WoW, while USDT eased to 2.69%, down −7.8%, and WETH firmed to 1.45%, up +8.3%. The USDC rise points to firmer dollar borrow demand as traders fund positions. The moves are modest, a long way from April’s exploit-driven supply shock, and read as leverage returning selectively rather than a broad releveraging. Keyrock continues to quote structurally higher supply yields across the stablecoins, the standing spread to the lending pools intact.

Cross-chain flows turned net negative, led out of the majors. Ethereum shed, $285M, the largest outflow on the board and consistent with the week’s spot ETH ETF redemptions, while Polygon lost −$184M. The inflows went to smaller and newer venues, with Avalanche taking +$80.3M, BSC +$28.6M, and the nascent Ink and Fraxtal chains adding +$26.3M and +$10.5M, while Solana and Monad saw only marginal outflows of −$7.7M and −$10.2M. Hyperliquid netted close to flat, a large gross inflow offset by an almost equal outflow across the week. Capital concentrated in incentive-led and newer venues while the blue-chip layer ones bled, an onchain echo of the selective rotation running through spot.

Tokenised real-world assets contracted on the week. Aggregate RWA AUM fell −1.78% WoW, the decline led by onchain credit as Maple slipped −6.68% and Centrifuge dropped −9.61%, with Paxos easing −4.80%. Securitize was the lone gainer at +1.39%, its tokenised-securities book holding up while the credit venues softened. Within RWAs, capital is favouring regulated tokenised securities over private-credit exposure.

Our Take: Onchain liquidity is following the macro tape lower, and doing it selectively. USDC borrow rates firming while flows leave Ethereum and RWA credit contracts says leverage is being put to work in pockets even as capital exits the established rails first. This is the narrow, narrative-driven behaviour visible in spot sectors and ETF flows, now showing in where dollars are borrowed and which chains they reach. We are watching whether USDC utilisation keeps climbing, which would mark real leverage demand returning rather than a one-week blip, and whether Ethereum’s outflows reverse once ETH ETF redemptions stop. The onchain read for now is capital thinning and concentrating at once.

Hyperliquid’s token now trades through two US-listed wrappers, and last week marked their first full week of trading. 21Shares’ THYP launched the prior week, with Bitwise’s BHYP joining days later, opening a regulated access point to the token behind the largest onchain perpetuals venue. Hyperliquid routes most of its trading fees into an Assistance Fund that buys the token in the open market, so demand for the supply has run through the protocol itself from the start. The ETFs add an external channel on top of that internal one.

HYPE ETF flows ramped organically and quickly from a standing start. Daily net inflows climbed from $1.17M on 12 May to a record $25.46M on 20 May, lifting cumulative net inflows to $75M and total net assets to $81.06M by 22 May. Trading kept pace with creations, with value traded reaching $85M, slightly above the funds’ entire net assets. For a product one week old, the ETFs are being traded actively and have seen organic interest from institutional counterparts who have historically found it tough to gain HYPE exposure because of the complexities of onchain onramping.

Set against HYPE’s supply, the ETF inflows are material. The two funds hold roughly 1.4M HYPE, about 0.57% of the 238M circulating supply already. The Assistance Fund, by comparison, has bought back about 26.7M HYPE, near 11% of circulating supply, for roughly $905M since March 2025. ETF net inflows of $75M over the launch window were close to six times the roughly $13M the buyback spent across the same days, so the ETFs, not the protocol, has been the larger marginal buyer of HYPE this week.

Our Take: The HYPE ETFs have launched as a clear success, with our desk seeing funds and family offices rotate out of ETH and SOL to gain HYPE exposure through the same wrapper structure. This week’s surge, creations outrunning the buyback, is the uptrend dynamic in miniature. In a rally, ETF inflows can become the larger source of demand, while in a drawdown the fee-funded buyback keeps removing supply and matters more. For Hyperliquid, the wrappers hand traditional allocators brokerage access to a stake in its franchise, the perpetuals venue, weekend trading, and onchain pre-IPO markets.

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