A Whale Closes 5x HYPE Long Position, Suffers $7.18M Loss Amid Crypto Market Volatility

A whale has closed a 5x long position in HYPE, suffering a $7.18 million loss, as the broader crypto market remains under pressure. The liquidation occurred against a backdrop of heightened volatility and regulatory uncertainty, with major market events influencing trading behavior.

Hyperliquid’s staking activity has shown recent improvement, with balances reaching $1.37 billion. This suggests renewed interest from long-term holders, though the overall trend in the DeFi ecosystem remains bearish. The rise in staking indicates that investors are locking up assets for longer periods, a move that can reduce market liquidity.

Futures Open Interest (OI) for Hyperliquid has also increased to $1.41 billion, reflecting growing retail participation and positioning ahead of potential price movements. However, the dominant trend in moving averages remains bearish, with the 50-day EMA at $28.22 and the 200-day EMA at $33.25 both sloping downward.

Why Did This Happen?

The liquidation of the whale’s 5x HYPE position occurred as the market grapples with regulatory uncertainty, particularly following the Senate Banking Committee’s decision to delay a key crypto market-structure bill. The delay came hours after Coinbase withdrew its support for the latest version of the legislation due to unresolved issues.

The regulatory landscape remains fragmented, with the House having passed its own market-structure bill last year. Now, both the Senate Banking Committee and the Senate Agriculture Committee must finalize their versions before the text can be reconciled with the House version. The delay raises concerns about the likelihood of passing clear rules by the end of 2026.

How Did Markets React?

The broader crypto market has reacted negatively to the regulatory uncertainty. Bitcoin fell as much as 1.8% on Thursday morning, sliding below $96,000. Altcoins such as Ethereum, XRP, Solana, and Dogecoin followed similar declines, ranging between 2% and 4%.

The bearish bias is also evident in liquidation data. According to CoinGlass, long liquidations amounted to $66.50 million, far outpacing short liquidations of $819,600. This suggests that more bullish positions are being unwound as traders adjust to the uncertain regulatory environment.

Hyperliquid’s price, HYPE, is currently trading above $26.00. Technical indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) show a transition toward bullish territory, though the dominant trend remains bearish due to sloping downward moving averages.

What Are Analysts Watching Next?

Analysts are closely monitoring the evolution of AI-driven scams, which have pushed crypto scam losses to a record $17 billion in 2025. Impersonation scams have grown more than 1,400% year-over-year, with AI tools enabling faster and more convincing fraud.

The use of AI in scams is reshaping the threat landscape, with scammers increasingly leveraging deepfakes, face-swap software, and large language models. These tactics have made scams harder to detect and have significantly increased the average amount scammed per victim.

On the regulatory front, the focus remains on whether a market-structure bill can be passed before the end of 2026. If passed, it could bring much-needed clarity and protection for crypto exchanges, many of which have faced legal challenges under the Biden administration.

Investors are also watching the performance of leveraged products like Mooncake’s 10xSOL market, which has integrated DeFi Development Corp.’s dfdvSOL token. The upgrade aims to improve yield, stability, and scalability, offering more sophisticated exposure to Solana without liquidation risk.

With the market in a state of flux, investors must remain cautious. The recent whale’s loss underscores the risks of leveraged trading in a highly volatile and still-evolving asset class.