Hyperliquid plunges 6% after API outage, rebounds swiftly

Hyperliquid, a decentralized perpetual futures exchange built on its own Layer-1 blockchain, experienced a 6% price dip following a 27-minute API outage on July 29, 2025. The disruption halted all trading activities, preventing users from placing orders, closing positions, or withdrawing funds during the period. Despite the technical setback, the token rebounded swiftly, recovering to $43.00 from a low of $42.30. The outage, attributed to network congestion rather than a hack or theft, highlighted vulnerabilities in centralized front-end systems within decentralized finance (DeFi) platforms, raising questions about the exchange’s scalability and contingency planning [1].

The API failure temporarily disabled short-selling and liquidation processes, as centralized interfaces—such as the website and mobile app—became inoperative. While the underlying blockchain continued producing blocks, the outage underscored the reliance on centralized infrastructure for critical functions, a contradiction to the core principles of decentralization [1]. Analysts noted that the incident could erode user confidence, particularly as Hyperliquid’s token has demonstrated strong momentum in recent months.

Despite the short-term volatility, Hyperliquid’s price has shown resilience. Over the past six months, the token surged more than 310%, rising from below $10 in February-March 2025 to $43.30 by late July. Year-to-date gains reached 80.05%, with a quarterly increase of 116.24%. TradingView data indicated a monthly price surge of 8.87% during the same period [1]. The token’s recovery post-outage, trading above its 50-day, 100-day, and 200-day exponential moving averages, further reinforced its robust fundamentals.

Technical indicators also signaled sustained institutional interest. The Relative Strength Index (RSI) remained in a neutral to bullish range, oscillating between 40 and 70 over six months. Occasional spikes above 70, observed during late May and early July rallies, indicated short-term overbought conditions without compromising the long-term upward trajectory. Trading volume, though generally moderate, showed sharp spikes during key price movements, reflecting strong buying pressure [1].

The incident follows a broader trend of infrastructure challenges in the DeFi sector, where reliance on centralized components remains a point of contention. While Hyperliquid’s token has maintained its upward momentum, the API outage serves as a cautionary tale for projects balancing decentralization with operational efficiency. The exchange has yet to disclose the root cause of the congestion, leaving further uncertainty about its ability to handle future stress events.

Source: [1] Hyperliquid sees 6% dip after API glitch, rebounds fast (https://coinmarketcap.com/community/articles/6889ce9d88079a5c3275db39/)