Hyperliquid’s native cryptocurrency, HYPE, has plunged another 9%, dropping to $12.54 as the platform grapples with a staggering $160 million in outflows. The sharp decline follows the liquidation of a massive ETH long position, which resulted in a $4 million loss for the platform’s HLP Vault, exerting significant selling pressure on HYPE’s price.
HYPE Price Faces Increased Bearish Sentiment
The liquidation event has sparked heightened market activity, with HYPE witnessing an 8% decline in the last 24 hours. Notably, trading volumes surged by 51% to exceed $207 million, signaling growing bearish sentiment. Investors are reacting to Hyperliquid’s second-largest single-day asset under management (AUM) outflow, which totaled $166 million on March 12.
The substantial outflow is largely attributed to panic-driven withdrawals by HLP Vault depositors. Despite assurances from Hyperliquid that this was not due to a protocol vulnerability or hacking event, the sheer scale of the liquidation has fueled uncertainty among investors.
Whale’s $340M ETH Long Position Sparks Market Chaos
A high-leverage whale trade involving 175,000 ETH, valued at approximately $340 million, played a pivotal role in the market turbulence. Initially, the trader secured an $8 million floating profit, closing 15,000 ETH before withdrawing 17.09 million USDC in margin. However, the subsequent liquidation of the remaining 160,000 ETH long position forced Hyperliquid HLP to assume the position at $1,915 per ETH.
Regarding commentary and questions on the 0xf3f4 user's ETH long:
— Hyperliquid (@HyperliquidX) March 12, 2025
To be clear: There was no protocol exploit or hack.
This user had unrealized PNL, withdrew, which lowered their margin, and was liquidated. They ended with ~$1.8M in PNL. HLP lost ~$4M over the past 24h. HLP's…
To prevent further disruption, the platform is gradually unwinding the position to mitigate market risks. Hyperliquid emphasized that the liquidation occurred due to margin withdrawals rather than any systemic flaw. Despite the recent $4 million loss, the HLP Vault still maintains a total historical profit of approximately $60 million.
Is It Time to Buy the Dip?
Despite the turbulence, prominent crypto analyst CryptoGod John views the HYPE price drop as a potential buying opportunity. According to John, the token has entered a strong support zone following its post-listing correction.
“Seen some drama on the timeline about it — but think this is a good area to scoop some while most hypetards who were loud at $20+ have now become very quiet,” John remarked.
While uncertainty looms over HYPE’s short-term trajectory, investors will closely monitor market reactions as Hyperliquid works to stabilize its platform.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
Also Read: Hyperliquid’s HYPE Drops 8.5% Amid $4M Vault Loss After Whale Liquidation
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