Hyperliquid Suffers $5M Loss In POPCAT Attack

Hyperliquid experienced a $5 million loss due to a manipulation of the POPCAT token, exposing vulnerabilities in its risk management system. The attack, which occurred on November 12, involved a trader using multiple wallets to artificially inflate the price of POPCAT, ultimately leading to mass liquidations and significant losses for Hyperliquid’s liquidity provider, HLP.

The trader deployed approximately $3 million in USDC from the OKX exchange and used it to open leveraged long positions, pushing the price of POPCAT to over $0.21. When the artificial buy wall was removed, the price plummeted, triggering liquidations and forcing HLP to absorb the resulting positions. Forensic analyses have linked the wallets involved in the attack to entities such as BTX Capital, although these allegations remain unproven.

HLP incurred losses of approximately $4.9–$5 million in closing out the positions, highlighting the risks associated with thin liquidity and concentrated positions within decentralized platforms. Hyperliquid responded by temporarily pausing its Arbitrum bridge to mitigate further instability.

Retail demand for HYPE tokens has weakened, as evidenced by a significant decrease in futures Open Interest, which fell from $2.08 billion at the end of October to $1.56 billion. While the immediate impact on HYPE’s price was minimal, with a brief rise to $39.39, it has since retreated to around $38.09.

Technical indicators suggest persistent selling pressure, with HYPE trading below key Exponential Moving Averages and failing to surpass resistance levels. Analysts warn that a break below the $35 support level could accelerate a decline. The incident underscores ongoing risks for decentralized exchanges handling leveraged tokens and is likely to impact investor sentiment.

Hyperliquid emphasized that deposits and withdrawals were ultimately restored and normal trading resumed following the attack. The company’s response helped to prevent further destabilisation despite the significant financial loss. The POPCAT event is a reminder of the vulnerability of decentralized platforms to market manipulation and the importance of robust risk management practices.

Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility.