21Shares Proposes 2x Leveraged HYPE ETF While Token Faces Critical Support Test

Chart showing Hyperliquid token price in descending channel despite recent HYPE ETF filings.

Summary:
Asset management firm 21Shares is seeking to launch the 21Shares 2x Long HYPE ETF to provide institutional investment opportunities in the DeFi sector. However, the associated Hyperliquid token, HYPE, is under pressure as it approaches important support levels.

Key Takeaways

21Shares filed with the SEC for approval of a 21Shares 2x Long HYPE ETF.
This ETF aims to deliver double the daily returns of the Hyperliquid token (HYPE).
The token is currently experiencing downward pressure and testing crucial support levels around $34-35.
A recovery above the $37.50 mark could indicate a shift, but it needs strong buying interest.

21Shares Files for 2x Long HYPE ETF

Asset management company 21Shares is taking a significant step by filing a proposal with the U.S. Securities and Exchange Commission (SEC) for its 21Shares 2x Long HYPE ETF. This fund is designed to provide investors with double the daily returns of the Hyperliquid token, thereby expanding institutional involvement in the decentralized finance (DeFi) space. If approved, it would mark the first leveraged ETF in the U.S. to track a live DeFi protocol’s market performance and associated fees.

On October 16, 21Shares submitted their filing, detailing that the ETF aims to mirror twice the daily performance of the Hyperliquid token (HYPE), not including fees and expenses. The fund will employ a mix of swap agreements, options, and potentially Spot HYPE Exchange-Traded Products (ETPs), although no Spot HYPE ETPs are currently available for investment in the U.S.

The innovative structure of the 21Shares proposal allows for exposure to HYPE's perpetual futures system through a daily reset model, which differs from standard crypto funds. Rather than holding the tokens directly, this ETF will use swap derivatives to attain leveraged exposure, enabling investors to take part in the DeFi ecosystem's growth without the complexities of token custody.

Amidst this development, other leading asset managers, such as Bitwise, have also filed for spot HYPE ETFs, demonstrating a rising institutional interest in accessing DeFi assets via regulated investment channels.

HYPE ETF Buzz and Token Price Struggles

Despite the excitement surrounding the HYPE ETF, the HYPE token itself is currently facing challenges. As of now, the token is trading at about $34, reflecting a nearly 10% decline within the last 24 hours, according to data from crypto.news. The latest price trends indicate that HYPE is testing crucial support levels in the $34-35 range, following a recent significant correction that echoes the broader market decline resulting from a $19.3 billion liquidation event last week.

Chart showing Hyperliquid token price in descending channel despite recent HYPE ETF filings. HYPE token price chart | Source: TradingView

Although HYPE experienced a brief upsurge to $43.24, driven by the release of the HIP-3 upgrade earlier this week, buyers were unable to sustain this increase. The 30-day simple moving average (SMA) currently stands at approximately $45.27, significantly above HYPE's present price, highlighting ongoing market weakness and confirming that the token remains in a bearish trend.

Additionally, the Moving Average Convergence Divergence (MACD) indicator is indicating a bearish crossover, with the MACD line at –3.19 and the signal line at –2.27. This suggests that sellers dominate the market, and the negative histogram bars indicate that selling pressure continues to grow.

If HYPE fails to maintain support around the $34-35 range, there is a possibility of a further decline toward the $30 level. Conversely, if it can recover above $37.50, it might signal a potential reversal, although such a rally would necessitate robust buying momentum to surpass current resistance levels.