JPMorgan has downgraded its earnings estimates for Circle and Coinbase, warning that the rapid ascent of decentralised exchange Hyperliquid is eating into the market share of traditional crypto platforms. The Wall Street bank's analysts cited Hyperliquid's low-fee derivatives trading as a key threat, eroding the dominance of Coinbase's spot exchange and Circle's USDC stablecoin ecosystem.
The news sent ripples through London-listed crypto-linked stocks on Friday, with Coinbase shares trading on US exchanges falling 3.2% by midday. In the UK, the FTSE 100 slipped 0.1% to 8,215.6 points, while the FTSE 250 edged down 0.3% to 20,432.1 points, as investor caution over tech valuations persisted. Bitcoin hovered near £46,200, down 1.5% on the day, reflecting broader unease.
Analysts at JPMorgan noted that Hyperliquid's on-chain derivatives platform now handles roughly 15% of global crypto perpetual futures volume, up from negligible levels a year ago. 'The structural shift toward decentralised venues poses a direct challenge to incumbent business models,' they wrote in a note to clients. For UK pension funds and retail investors with indirect exposure via funds tracking Coinbase or stablecoin issuers, the downgrades signal a potential drag on returns.
The pressure on Circle is particularly acute, as Hyperliquid's native stablecoin, USDe, has gained traction, threatening the dominance of USDC in DeFi lending. JPMorgan trimmed its 2026 revenue forecast for Circle by 8%, while Coinbase's estimate was cut by 5%. The bank maintained a 'neutral' rating on both, but warned that further market share losses could prompt additional downgrades.
Market watchers said the development underscores the intensifying competition in crypto infrastructure. 'Hyperliquid's growth is a reminder that decentralisation is not just a buzzword – it's reshaping where liquidity flows,' said a senior analyst at a London-based fintech consultancy. For UK investors, the implications extend beyond crypto: the shake-up highlights how swiftly new entrants can disrupt established fee structures, a dynamic that could spill into other financial sectors.