A recent surge in the Hyperliquid token caused significant liquidations among traders' short positions. Here are the key details.
Overview of the Situation
The XPL/USD contract on Hyperliquid spiked to $1.80 before quickly retracting. Analysts attribute this to a handful of whales making profits exceeding $46 million very swiftly. Similarly, Binance's pre-market showed a spike to $0.55 for the same token.
Operational Status of Hyperliquid
Hyperliquid stated that its systems functioned as intended. Liquidation mechanics were initiated before switching to auto-deleveraging to prevent bad debt buildup. Losses were confined to XPL positions, with no broader market impact reported.
New Safety Measures
In response to user concerns, Hyperliquid announced new protective measures including a hard cap on mark prices, limiting them to not exceed 10 times the 8-hour exponential moving average. Additionally, pricing will incorporate data from external markets such as Binance to improve price discovery.
The events surrounding the Hyperliquid token highlight both the opportunities and risks of trading pre-launch assets in permissionless markets. Traders noted that while there was no intervention, Hyperliquid adhered strictly to its rules.
