A Whale's Gamble: XPL Surges 200% as Order Book Gets Wiped

Hyperliquid, a prominent decentralized derivatives exchange, has implemented a new mark price calculation method for pre-market trading, leading to significant volatility in the funding rates of tokens XPL and WLFI. The update has triggered sharp price movements and liquidity shocks, impacting both institutional and retail traders. According to on-chain data, XPL experienced a surge of over 200% in a short span of time, with a large whale account depositing 16 million USDC and initiating a series of large long positions that effectively swept the order book, liquidating short positions and driving the price to a peak of $1.80 from $0.58. This move generated a $16 million profit for the whale, with speculation that the account could belong to Justin Sun, founder of the Tron network [4].

The funding rate for WLFI also saw extreme bearish sentiment, with an annualized rate of -35% reported by Hyperliquid. This rate indicates that traders holding short positions were paying those with long positions, a clear sign of strong downward expectations for the token. WLFI, a cryptocurrency linked to the Trump family, opened at $0.44 but quickly fell below $0.25 within hours of trading, reducing its fully diluted market cap to $24 billion from $44 billion [2]. The futures market saw $59 million in trading volume and $57 million in open interest, further highlighting the aggressive shorting activity.

In response to the XPL price surge, Hyperliquid confirmed that the platform had not experienced any technical failures or incurred bad debts, attributing the volatility to market dynamics rather than internal issues. The exchange also reiterated its commitment to user risk management, urging traders to exercise caution amid heightened volatility [1]. The recent events follow a similar pattern observed with the JELLY token, where a massive whale order led to a nearly $12 million loss for the HLP liquidity vault. In that case, Hyperliquid issued refunds to affected traders and enhanced security protocols to mitigate future risks [4].

The WLFI token had previously been non-transferable but was recently made tradable following a governance vote in July. This decision paved the way for the token's futures debut on Hyperliquid in early August, with spot trading and token distribution expected to launch in September. Despite the regulatory hurdles, the token’s listing has already attracted significant attention, with over $370,900 in liquidations recorded in the past four hours alone, including $297,100 in short position closures [3]. The sharp decline in WLFI’s price suggests that traders are skeptical of its valuation and have capitalized on the bearish outlook.

The funding rate volatility and order-book sweep mechanism demonstrate the inherent risks of trading in markets with limited liquidity. In thinly traded environments, large whale positions can trigger cascading liquidations, leading to rapid price swings and potential losses for retail investors. For liquidity providers, such as those in Hyperliquid’s HLP vault, the risks are dual-edged—while they can earn fees during volatile periods, they also face the potential for substantial losses when volatility strikes [4]. Analysts highlight the importance of monitoring order book depth and on-chain activity for traders looking to avoid exposure to whale-driven price swings.

Source:

[1] Data: Two whales shorting XPL have deposited 73 million USDC into Hyperliquid to avoid liquidation risk (https://www.chaincatcher.com/en/article/2201243)

[2] WLFI Futures Tumbles 44% as Traders Short the Trump-... (https://www.coindesk.com/business/2025/08/26/wlfi-futures-tumble-44-on-debut-as-traders-short-the-trump-linked-token)

[3] WLFI spiked up to $0.42 in Hyperliquid pre-market trading... (https://www.bitget.com/news/detail/12560604932228)

[4] Was It Justin? XPL Soars 200% on Hyperliquid as Whale... (https://www.mexc.com/en-GB/news/was-it-justin-xpl-soars-200-on-hyperliquid-as-whale-wipes-out-order-book/75313)