Whales Short PUMP Token on Hyperliquid Ahead of Launch

Whales on Hyperliquid have already initiated short positions on PUMP, the newly announced token of Pump.fun. Two significant investors made deposits and opened short positions with limited leverage, indicating a bearish outlook on the token's performance.

Hyperliquid has become the platform of choice for shorting PUMP, with the token expected to be distributed to wallets starting from July 15. The exchange launched a PUMP-USD futures market in response to user requests, capping leverage at 3X to manage risk.

Hyperliquid introduced PUMP with hyperps, which do not rely on external oracles for price discovery. Instead, the price of PUMP will be determined by market incentives based on funding rates. If a large number of whales short PUMP, the incentives will shift to favor long positions with more favorable funding rates.

Following the launch of the PUMP token, Hyperliquid plans to transition the pair to its usual perpetual futures format. The exchange has warned of potential extreme volatility and low liquidity in the initial PUMP market, advising traders to exercise caution.

The whale deposits on Hyperliquid occurred just hours after Pump.fun confirmed the launch of the new token, with a presale page available on Bybit. Within the first hours of trading, Hyperliquid saw significant new open interest and trading volumes. PUMP initially traded around $0.005, higher than its intended presale price.

PUMP is expected to launch with a generally unfavorable view, following a period of lower meme activity. The token is anticipated to experience a crash soon after its launch. However, the short positions remain risky due to the potential for high volatility in the initial trading period.

Currently, most of the short positions are held above the intended token sale price, with traders expecting at least a 30% rise after the actual token launch and the addition of spot trading.

Whales have taken different positions on PUMP, with one whale's position fluctuating between $744K and $700K, depending on the notional value of the pre-traded token. This whale chose a liquidation price of $0.02, allowing for more leeway in case PUMP rallies in its early trading.

The other trader's position reached a notional value above $790K at one point. This whale chose an extremely low entry price of $0.005 and has a liquidation price of $0.009. One of the whales took a more cautious position with a relatively high liquidation price, insuring against a post-launch rally.

For now, on-chain data shows these are the most significant PUMP positions, coming within the first hours following the PUMP-USD pair launch. PUMP will be sold at $0.004, with an expected distribution of 150 trillion tokens. The initial trading may easily liquidate the early short positions, especially if not all traders can send their tokens to an exchange for selling.

Binance has also announced plans to add its own perpetual futures market for PUMP, offering up to 5X leverage. The trading pair launched as of 7:30 UTC on July 10, providing another tool for PUMP price discovery. The current futures market for PUMP remains extremely chaotic, with high funding rates for short positions. Funding rates jumped to 1,100% annualized for Hyperliquid short positions, indicating an expectation that the token sale would end in a crash.

Ahead of Binance’s pair launch, KuCoin offered outright token purchases capped at $1M per person, higher than the Bybit limit of $500K per individual user. The exchange filled its pre-launch subscription within hours. The token sale is limited to traders outside the EU and the USA. Hyperliquid may remain the most viable option for exposure to PUMP, without outright holding the token.