A whale on HyperLiquid attempted to squeeze out short sellers by leveraging its funding advantage, causing distorted funding rates and significant pri...
TL;DR
A whale on HyperLiquid used a large USDC deposit to manipulate HYPE prices, causing extreme funding rates and a short squeeze that reduced short positions from $67.1M to $24M.
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On November 25th, according to MLM monitoring, a whale deposited 32 million USDC into HyperLiquid and used TWAP to sweep the spot HYPE market, intending to squeeze out a large number of short positions (approximately 5% below the liquidation price). Within 15 minutes, it bought $14.5 million worth of HYPE. Simultaneously, it placed $7.05 million worth of short orders in the $34.5-$36 range, hoping to induce a short squeeze.
Subsequently, traders opened short positions against his buy orders, briefly pushing funding rates above -800% and causing a $0.40 premium in the spot market. The whale then short 100,000 HYPE tokens ($3.3 million) at market price, causing the price of HYPE to drop by 4% within seconds.
The squeezed short positions now amount to only 727,000 HYPE contracts ($24 million), down from 2.1 million contracts ($67.1 million) previously.