Leverage and Whales Collide, Turning XPL Into a $38M Pump-and-Dump Playground

Hyperliquid’s XPL token experienced a dramatic price surge driven by apparent whale manipulation, generating nearly $38 million in profit for the manipulator within one hour. According to on-chain data, the manipulation occurred between 5:00 and 6:00 a.m., during which a large actor swept the entire XPL order book, squeezing short positions and triggering an immediate price spike [1]. The price of XPL jumped to $1.8 within two minutes, representing an increase of over 200% from earlier levels. The same whale began closing long positions shortly after, earning $16 million in just one minute [1].

This event is not isolated. On March 26, a similar manipulation tactic was observed with JELLY, where a whale first caused a price crash through large-scale selling, creating a passive short position for HLP. The manipulator then repurchased JELLY, driving the price upward and leading to a reported $12 million loss for HLP [1]. These actions highlight the volatility and risks associated with leveraged positions and pre-launch markets.

Hyperliquid’s pre-market trading for XPL opened at approximately $0.40, implying a fully diluted valuation of $4 billion—8 times its initial public sale valuation of $500 million [2]. The platform introduced “hyperps” contracts with up to 3x leverage, which contributed to high volatility and a $49 million trading volume with $33 million in open interest shortly after listing. The leverage mechanism allows traders to amplify gains and losses. For example, a trader who maintained a 3x leveraged long position reportedly earned $175,000 in unrealized profits [2]. However, the risks are equally severe, as a 20% price drop would result in a $600 loss for a $1,000 deposit.

The XPL pre-launch market has attracted institutional and retail attention, with a $373 million token sale and Binance’s $250 million USDT yield program filling within an hour. Binance and Hyperliquid are jointly supporting the pre-launch market, which has amplified Plasma’s exposure in the stablecoin and DeFi sectors. Plasma’s blockchain is positioned as a fee-free and Bitcoin-anchored Layer-1 solution for stablecoin transactions. If the pre-market trading continues to perform well, it could accelerate institutional adoption of the platform [2].

Market makers like Wintermute and Flow Traders are reported to be providing liquidity for XPL, which could help stabilize trading conditions but also introduce short-term volatility driven by arbitrage strategies. Hyperliquid’s decentralized order book and lack of clearance fees on liquidations are designed to enhance transparency and fairness. However, the use of 3x leverage increases the risk of liquidation events, especially in a volatile market [2]. Hyperliquid’s unique mechanism for calculating funding rates based on its own mark price, rather than external oracles, is intended to reduce manipulation risks [2].

The manipulation of XPL highlights the challenges and opportunities in decentralized finance markets. Traders are advised to use isolated margin and stop-loss strategies to manage leverage risks. Meanwhile, Plasma’s long-term success may depend on its ability to maintain institutional partnerships and execute its strategic growth initiatives, including DeFi incentives and exchange integrations [2].

Source:

[1] ChainCatcher (https://www.chaincatcher.com/en/article/2200944)

[2] Tekedia (https://www.tekedia.com/hyperliquids-xpl-pre-launch-market-and-3x-leverage-hyperps-create-a-high-stakes-environment-for-traders/?srsltid=AfmBOopVKjpT12KZdk9IukenkzLdbzDWP9ufqgKMfk7qPgrF8Hc9-Vbj)