Author: Chloe, ChainCatcher

Yesterday, two addresses identified by the market as mainstream market makers on Hyperliquid withdrew nearly 90% of the liquidity of BTC and ETH in the same time period, with a total estimated withdrawal scale of nearly 100 million dollars.

Coincidentally, just three days ago, the two largest traditional exchanges in the world, CME and ICE, jointly pressured the U.S. CFTC and Congress to tighten regulation of Hyperliquid.

Is this merely an isolated incident of professional players “pricing regulatory risk,” or is it a harbinger that the regulatory arbitrage gains enjoyed by DEX over the past three years are coming to an end?

Market makers withdrawing simultaneously, collectively reducing nearly 100 million dollars

According to monitoring from the on-chain intelligence platform Hyperinsight, on May 18, two addresses marked by the market as mainstream market makers significantly reduced their market-making exposure within a few hours: one address had previously provided liquidity on 175 cryptocurrencies, with a market-making scale of about 45 million dollars for BTC alone, closing all positions on the morning of May 18 and withdrawing about 6 million dollars to Binance.

The liquidity of BTC + ETH from another address sharply decreased from about 40 million dollars to about 4 million dollars, a reduction of about 90%; the total position scale dropped from nearly 80 million dollars to about 41 million dollars. Although it still maintains orders on 111 cryptocurrencies, the depth of the order book for mainstream coins has clearly thinned.

For a derivatives platform that entirely relies on on-chain order book matching, two mainstream market makers withdrawing simultaneously in the same time period will significantly raise the execution costs of large trades.

If we pull the timeline back three days. On May 15, Bloomberg reported first: CME and ICE have expressed concerns to CFTC officials and congressional members regarding Hyperliquid, believing that this rapidly growing on-chain perpetual futures platform may pose trading risks to traditional commodity markets, particularly crude oil.

The specific demands of the two exchanges are very clear: requiring Hyperliquid to register with the CFTC, implement KYC, and accept trade monitoring. The reason being that Hyperliquid's anonymous and year-round derivative trading environment may distort the global oil price benchmark and provide a loophole for sanctioned entities.

Trabue Bland, Senior Vice President of ICE Futures, directly stated: “This is a benchmark integrity issue.” CFTC Chairman Michael Selig has publicly stated several times recently that the CFTC will establish a clear regulatory framework for emerging products such as crypto perpetual contracts and expressed concerns about the activities of offshore platforms like Hyperliquid.

As soon as the news broke, the HYPE token dropped from over 45 dollars to below 43 dollars, a decline of about 6%.

The pie divided by Wall Street, Hyperliquid is labeled

But why now? Hyperliquid has stepped on Wall Street's bottom line.

According to several foreign media reports, the critical detonator is HIP-3, a feature launched by Hyperliquid at the beginning of last year, allowing users to trade contracts for traditional assets such as oil and stocks directly on-chain. With geopolitical tensions escalating in late February and the traditional futures market closing on weekends, Hyperliquid's oil contract trading volume saw explosive growth.

Hyperliquid has continuously expanded its market share through features such as the HIP-3 market, which has long been dominated by CME and ICE.

According to data from crypto intelligence provider Kaiko, the cumulative trading volume of Hyperliquid's oil contracts soared from 339 million dollars at the end of February to 7.3 billion dollars at the end of March, growing more than 20 times in just a few weeks.

Looking at Hyperliquid's overall position in the on-chain derivatives market, according to DeFiLlama's data as of mid-May 2026, Hyperliquid's 30-day perpetual contract trading volume is about 176.4 billion dollars, its 24-hour trading volume is about 7.9 billion dollars, and its open interest is about 9.3 billion dollars, with an annualized trading volume of about 2.15 trillion dollars.

In the on-chain perpetual DEX market, Hyperliquid accounts for 31.7% of the 30-day trading volume, but holds 58.5% of the open interest in the space, meaning it carries nearly 60% of the on-chain perpetual liquidity.

Moreover, viewing the cumulative values for Q1 2026, Hyperliquid processed approximately 619.46 billion dollars of perpetual trading volume for the entire quarter, with market shares ranging from 34% to 44%, accounting for about 53% of the fee income in the space and achieving around 820 million dollars in revenue over the past 12 months.

For CME and ICE, Hyperliquid is no longer an experimental market but a direct competitor that is eroding their cash flow in the weekend and after-hours segments.

Further analysis from CryptoSlate indicates that if regulators accept CME and ICE's narrative framework, the enforcement focus will be on Hyperliquid's commodity market, where oil perpetuals may face access restrictions, oracle disclosure requirements, or front-end geographic blocking, while the crypto-native market (BTC/ETH perpetuals) would be classified under another regulatory category.

Therefore, it makes sense for market makers to withdraw during this period.

Looking back, in October 2025, the crypto market experienced a liquidation wave of 19 billion dollars, during which several market makers temporarily halted quoting. Wintermute strategist Jasper De Maere later explained to Decrypt: “We take a very rules-based approach, if we can't make markets in a safe, delta neutral way, we won't participate in this game.”

The derivatives trading company Galaxy's Magadini also stated: “If you are a market maker and cannot trust the integrity of your hedging tools, the only thing you can do is exit.”

Now, with the uncertainty of DEX regulation rising sharply, platforms possibly being required to KYC, and potentially being banned for U.S. users, for mainstream market makers, withdrawing is simply a standard operating procedure outlined in the risk manual.

Smart money pre-pricing regulatory risks?

In response to recent events, Hyperliquid immediately issued a statement through HPC, asserting that the on-chain perpetual contract market is "more efficient and lower risk" compared to traditional centralized exchanges, and hopes that the CFTC can develop a tailored regulatory framework for the development of on-chain derivatives platforms. HPC has also proactively contacted the CFTC to discuss establishing a legal path for U.S. users to participate.

The Hyperliquid Policy Center (HPC) is positioned as an independent research and advocacy organization, focusing on regulatory frameworks for perpetual derivatives and on-chain financial infrastructure. It was established with a funding of 1 million HYPE tokens from the Hyper Foundation under the Hyperliquid ecosystem in February this year.

The organization is led by Jake Chervinsky, a seasoned crypto policy lawyer serving as founder and CEO. Chervinsky previously held positions as General Counsel at crypto venture firm Variant and Policy Director at the Blockchain Association, making him one of the most recognized lawyers in the Washington policy circle of the crypto community.

In conclusion, in the short term, the withdrawal of market makers from Hyperliquid can be understood as “smart money pre-pricing regulatory risks.” It is assumed that institutions would not wait for the CFTC to act before taking action, and reducing exposure is merely a compliance-driven SOP.

In the long term, this event may mark an important turning point: the triad of arbitrage bonuses that DEX relied upon—time arbitrage, geographical arbitrage, and asset arbitrage—are being re-priced. These three arbitrages are essentially “regulatory vacuum bonuses,” when Hyperliquid was merely an experimental field, the bonuses could be enjoyed at zero cost, but once it begins to intersect with traditional finance, Wall Street will inevitably push it into the regulatory game rules.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。