Hyperliquid News Today: Hyperliquid Whale Adds $2M to Avert $19.6M Loss as HYPE Dips Below $25

A major whale holding a 5x leveraged long position in Hyperliquid's native token, HYPE, is facing an unrealized loss of nearly $19.6 million as the token's price dips below $25. In a bid to avoid liquidation, the whale recently added $2 million in USDC collateral to shore up the position. The liquidation price for the position is now at $20.65, making the whale highly sensitive to further price declines.

The move comes amid a broader sell-off in HYPE, driven by massive liquidations and regulatory uncertainty. The token is currently trading at $26.72, down over 9% in the last 24 hours. Traders are closely watching whether the price can hold above the key support level of $20.65, which would determine the fate of the whale's position.

Meanwhile, the Hyperliquid Foundation is attempting to stabilize the token by proposing a burn of the assistance fund, which holds over 37 million HYPE tokens. If approved, this move would reduce the token's supply and potentially restore bullish sentiment in the derivatives market.

How Markets Reacted

HYPE has experienced sharp volatility over the past week, with price swings exacerbated by leveraged liquidations. On December 16 alone, over $115 million in long positions were liquidated as the price fell below the $28–30 range. This triggered a cascading sell-off, as forced exits pushed the token further downward.

The token's recent drop also coincided with delays in the launch of the Bitwise Hyperliquid ETF, which had raised hopes for institutional inflows. Investors who had anticipated the product's approval took profits early, further deepening the sell-off. The uncertainty around the ETF and its regulatory implications has left many traders sidelined.

Adding to the selling pressure, a token unlock on November 29 released 1.75 million HYPE tokens into circulation, increasing supply at a weak market moment. Analysts warn that the timing of the unlock may have encouraged early holders to sell, compounding the downward momentum.

What Analysts Are Watching

Technical indicators suggest that HYPE remains under bearish pressure, with momentum metrics pointing to continued weakness. The token has already broken key support levels, including the $28.1 and $30 marks, and is now eyeing the $20s. Altcoin experts, including AltcoinSherpa, believe the token could test the $20 level if the downward trend persists.

On the derivatives side, the recent supply reduction proposal by the Hyperliquid Foundation has sparked optimism. Open Interest (OI) for HYPE derivatives rose by 1.63% in the last 24 hours to $1.53 billion, suggesting increased activity and bullish positioning. The OI-weighted funding rate also climbed to 0.0839%, indicating strong demand for long positions.

However, these bullish signals are not enough to offset the immediate bearish dynamics. The market is still processing the news of the potential burn, and the final outcome of the vote on December 24 could be a key catalyst. If the burn passes, it could mark a turning point for HYPE, but for now, the token remains vulnerable to further price erosion.

Risks to the Outlook

The whale's 5x long position is just one example of the risks posed by leveraged trading in a volatile market. If HYPE falls below $20.65, the position will be liquidated, resulting in a massive $19.6 million loss. This event could trigger further selling pressure, especially if other leveraged traders are forced to close their positions.

On-chain data also reveals that leveraged positions are widespread in the Hyperliquid ecosystem. The recent liquidation of a $11.58 million Binance whale position highlights the fragility of leveraged trading strategies. As Bitcoin and other major assets remain volatile, the risk of cascading liquidations remains high.

Regulatory developments will also play a critical role in shaping the token's near-term prospects. The delay in the BHYP ETF's launch has added to uncertainty, and investors will be closely watching for any updates from regulators. For now, HYPE continues to trade in a bearish environment, with both technical and fundamental risks looming large.