- Hyperliquid (HYPE) token dropped, hitting a low of $12.74 before recovering.
- A whale liquidation led to a $4M loss for Hyperliquid’s HLP vault.
The price of Hyperliquid’s HYPE token fell 8.5% following a whale liquidation event that left the protocol’s HLP vault with a $4 million loss. The event triggered speculation about potential manipulation, but Hyperliquid denied any exploit or hack.
HYPE dropped to $12.74 before recovering to $13.97. The market cap declined by 2.56% to $4.66 billion, while the 24-hour trading volume fell 11.87% to $189.44 million.
The HLP vault, a core component of Hyperliquid’s decentralized perpetual futures exchange, facilitates market-making and liquidation strategies. Users deposit USDC and share in the profits or losses. The vault’s performance is transparently tracked on-chain, with deposits locked for four days.
A whale deposited 15.23 million USDC to build a long position in ether, reaching 160,234 ETH ($306.85 million). The trader was later liquidated but managed to withdraw 17.09 million USDC, making a profit of $1.86 million. This led to a $4 million loss for the HLP vault, which holds around $451 million in total value locked.
Hyperliquid Responds to Liquidation Event
Hyperliquid clarified that its liquidation engine struggled with the size of the position. The trader had unrealized profits, withdrew funds, lowered their margin, and got liquidated. This resulted in HLP absorbing the loss.
In response, Hyperliquid announced updates to its leverage limits. The maximum leverage for Bitcoin and Ether trades will be reduced to 40x and 25x, respectively. This adjustment aims to increase maintenance margin requirements and provide a buffer for larger position liquidations.
Technical Analysis
HYPE’s price action remains volatile following the liquidation event. The RSI currently sits at 43, signaling neutral momentum but leaning toward oversold territory. The 50-day moving average (MA) is at $14.35, acting as near-term resistance. The 200-day moving average (MA) remains at $12.10, providing a critical long-term support level.
MACD shows bearish momentum, with the signal line crossing above the MACD line. If selling pressure continues, the next key support level is $12.50, while a breakout above $14.35 could push the price toward the $15.20 resistance zone.
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