Bitwise Asset Management just did something unusual for a fund manager: it decided to eat its own cooking. The firm announced on May 18 that it will dedicate 10% of the management fees generated by its new Hyperliquid ETF (ticker: BHYP) to purchasing $HYPE tokens, which it plans to hold on its corporate balance sheet and stake through its Bitwise Onchain Solutions division.
Early numbers suggest real demand
BHYP began trading on NYSE Arca around May 15, offering investors 100% direct exposure to the $HYPE token along with the potential for staking rewards. The ETF carries a fee cap of 0.67%, with an initial fee waiver covering the first $500 million in assets under management.
The early reception has been strong. BHYP pulled in $8.8 million in net inflows on a recent trading day, with $18.5 million in trading volume following shortly after. The broader $HYPE-linked ETF category saw over $11 million in collective daily inflows, outpacing several other digital asset offerings.
Why Bitwise is betting on $HYPE’s tokenomics
Approximately 99% of the network’s revenue gets routed toward $HYPE buybacks and burns. Bitwise has described $HYPE as potentially one of the most undervalued tokens in crypto, estimating Hyperliquid’s annualized protocol revenue at somewhere between $800 million and $1 billion.
By staking the purchased $HYPE tokens through its onchain solutions arm, Bitwise isn’t just holding a speculative position. It’s participating in network security and earning yield, which further compounds its exposure over time.
What this means for investors
By recycling a portion of those fees back into the underlying asset, Bitwise is signaling that it doesn’t view BHYP as a one-off product launch. For BHYP holders, every fee dollar that gets converted into $HYPE adds marginal buying pressure to the token. It’s a small percentage, 10% of the management fee, but on a product that could scale into hundreds of millions in AUM, the cumulative impact becomes material.
There are risks, of course. Bitwise’s corporate balance sheet now has direct exposure to $HYPE price volatility. The fee waiver on the first $500 million in AUM also means Bitwise won’t be generating meaningful fee revenue, and therefore won’t be buying meaningful amounts of $HYPE, until the ETF reaches significant scale.
Protocol revenue in crypto can be cyclical, driven by trading volume that fluctuates wildly with market conditions. An $800 million to $1 billion annual run rate during a bull market looks very different during a downturn. If volumes contract, the buyback-and-burn mechanism that makes $HYPE’s tokenomics so attractive slows down considerably.
