HYPE Drops 9% as Hyperliquid Faces $160M Outflow

Hyperliquid’s native cryptocurrency, HYPE, experienced a significant decline of 9%, dropping to $12.54. This downturn was triggered by a massive outflow of $160 million following the liquidation of substantial Ethereum (ETH) long positions on the platform. The liquidation event resulted in a $4 million loss in the platform’s HLP Vault, leading to intense selling pressure on HYPE’s price.

The liquidation of the ETH long positions has put HYPE under severe selling pressure over the past 24 hours. This recent drop of 8% coincides with a 51% surge in daily trading volumes, exceeding $207 million. This surge indicates a growing bearish sentiment surrounding the altcoin.

Hyperliquid faced a significant net outflow of $166 million in assets under management (AUM) on March 12, marking the platform’s second-largest single-day outflow on record. This substantial outflow was primarily driven by withdrawals from HLP Vault depositors in response to the losses incurred.

A high-leverage whale trade involving 175,000 ETH, valued at approximately $340 million, led to significant market movements. The trader initially secured a floating profit of $8 million and closed 15,000 ETH before transferring 17.09 million USDC in margin back to their address. However, following the margin withdrawal, the remaining 160,000 ETH long position was liquidated. The large liquidation size forced Hyperliquid HLP to assume the position at $1,915. The platform is now gradually unwinding the position to mitigate market disruption and manage associated risks.

Hyperliquid has stated that this event was not due to a protocol vulnerability or a hacking incident. Instead, the user withdrew margin while holding unrealized profits, lowering their margin ratio and triggering liquidation. Despite a $4 million loss in the past 24 hours, Hyperliquid’s HLP maintains a total historical profit of approximately $60 million.

Prominent crypto analyst CryptoGod John has expressed bullish sentiments for HYPE price, highlighting the current market conditions as a potential buying opportunity. John noted that the token has retraced significantly since its earlier listing pump, entering what he describes as a strong support zone. “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.