HYPE’s Price Nosedives by 20% After Short Squeeze Orchestrated by Whales

HYPE’s price went on a nosedive, dropping by 20% in a single day. This sharp drop was the result of a short squeeze orchestrated by $Jelly whales, leading to losses exceeding $12 million.

The price of HYPE, a popular DeFi token, experienced a significant drop of 20% in a single day, following a short squeeze orchestrated by $Jelly whales, resulting in losses exceeding $12 million. Despite the incident, the token’s price is still holding a support level, and a price recovery is likely soon.

As reported by blockchain analytics firm Messari, Hyperliquid, a DEX specializing in perpetual futures trading, made headlines after a large number of whales opened a huge $6M short position on Jelly (40% of token supply) and a long position simultaneously.

The massive position, which was leveraged at 10x, got liquidated immediately as the price of Jelly went up, and Hyperliquid was supposed to buy up 40% of the supply from the order book, pumping the price and putting the trader’s long in profit.

But instead, Hyperliquid decided to open a short position on $JELLY, potentially to liquidate the trader and prevent them from rugging the protocol. However, the community started to pump JELLY to liquidate Hyperliquid, as the DEX now faces full liquidation if $JELLY hits a $150 million market cap (currently about 3x away).

There are reports of users withdrawing funds from the protocol, reducing Hyperliquid’s short-position collateral, and bringing liquidation closer. While critics view the move by the DEX as unethical, with some even comparing it to FTX 2.0 for its centralized governance, the drama took a new turn with on-chain sleuths suggesting the involvement of Binance-linked wallets to sabotage the DEX.

According to ZachXBT, two wallets (0x20E8 and 0x67f) were the key players in the JELLY token incident, further fueling speculation of coordinated market manipulation.

Moreover, Binance and OKX listing $JELLY perps despite the incident might indicate an underlying rivalry between CEXes and DEXs, leading many on X to assert that Binance is purposely trying to get Hyperliquid liquidated.