HYPE Rebounds After $12M Short Squeeze Drama

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. Despite the incident, the token’s price is still holding a support level, and a price recovery is likely soon.

Hyperliquid, a DEX specializing in perpetual futures trading, made waves after a large number of whales opened a huge $6M short position on Jelly (40% of token supply) and a long position simultaneously. As expected, the massive position with high leverage got liquidated immediately.

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 it decided to open a short position on $JELLY, potentially to liquidate the trader and prevent them from rugging the protocol.

$JELLY Pump Sparks HYPE’s Liquidation Fears

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 see the DEX’s move as highly unethical, with some even framing it as FTX 2.0, for centralized governance, the drama took a new turn when on-chain sleuths hinted at the potential involvement of Binance-linked wallets to undermine the DEX.

According to ZachXBT, two wallets (0x20E8 and 0x67f) were claimed to be the key players in the JELLY token incident, further sparking speculation of coordinated market manipulation. Adding fuel to the fire are reports of Binance and OKX listing $JELLY perps despite the incident, leading many to frame the incident as a war between CEXes and DEX.