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Memecoin POPCAT underwent a noticeable decline on Wednesday subsequent to a significant manipulation occurrence on Hyperliquid (HYPE), one of the premier decentralized exchanges in the cryptocurrency sector.
POPCAT Encounters 43% Decrease Following Manipulative Tactic
As per a thorough examination of the scenario by DeFi analyst Hanzo on social media platform X (formerly Twitter), an unidentified trader implemented a meticulously coordinated plan roughly 13 hours ahead of the market upheaval.
The trader extracted $3 million in USDC from the OKX platform and spread the capital across 19 distinct wallets on Hyperliquid. Following this, they established substantial long positions on POPCAT, amassing total exposure estimated between $20 million and $30 million.
To fabricate an illusion of demand for the memecoin, the trader created an enormous buy wall at the price threshold of $0.21, with orders accumulating to $30 million positioned on the order book. This deceptive veneer of elevated buying interest effectively lured authentic traders, urging them to join the movement and enhance their own purchasing activities.
However, the scenario shifted abruptly when the trader dismantled the buy wall without notice, precipitating an immediate collapse in the POPCAT price. This transition culminated in the liquidation of all long positions held by traders.
The anonymous trader forfeited their $3 million collateral, whereas Hyperliquid’s HLP system automatically absorbed the outstanding positions. This measure triggered an additional loss of approximately $4.9 million to the HLP, intensifying a broader market downturn across the token.
Hyperliquid Encounters Third Major Disruption This Year
In the aftermath of the incident, the Hyperliquid team implemented urgent actions to stabilize the market and close any outstanding exposures. Shortly afterward, the platform suspended its Arbitrum (ARB) bridge, though it continued to process deposits and withdrawals as usual.
The community has voiced doubts regarding the events surrounding this incident, with numerous individuals suggesting it might not have been an incidental liquidation.
Rather, some believe the occurrence could resemble a deliberate stress test or an assault aimed at undermining Hyperliquid’s liquidity system. Some argue that the swift loss of millions within such a brief timeframe appears too orchestrated to be simply coincidental.
This event signifies the third substantial market disruption on Hyperliquid in 2025, raising critical inquiries about the exchange’s methods in managing liquidity concentration and its systemic risk management practices, as highlighted by Hanzo in his analysis.
Post-manipulation, the POPCAT memecoin experienced a sharp drop of approximately 43%, decreasing from $0.21 to $0.12, with total liquidations approximating around $63 million.
The native token of the decentralized exchange, HYPE, also saw a notable decline following the event. According to CoinGecko data, it is presently trading at $38.25, reflecting a 7% decrease on the weekly scale.
Featured image from DALL-E, chart from TradingView.com
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