- POPCAT manipulation led to Hyperliquid’s HLP absorbing approximately $5M in losses.
- Hyperliquid’s token is trading below key EMAs amid bearish momentum.
- Retail demand for HYPE has waned and futures open interest has fallen to $1.56B.
The decentralized derivatives platform Hyperliquid faced severe selling pressure after a sophisticated POPCAT attack that resulted in millions of dollars in losses.
The POPCAT exploit, which targeted Hyperliquid’s liquidity provider mechanism, exposed weaknesses in the protocol’s risk management and shook retail demand and overall market sentiment for the HYPE token.
POPCAT manipulation forces HLP to absorb roughly $5M in losses
The POPCAT incident occurred on November 12, when traders used multiple wallets to create artificial buy walls and execute a series of coordinated trades across the POPCAT token market.
On-chain analysts report the traders deployed about $3 million in USDC from the OKX exchange, distributing funds across 19 separate addresses.
Those wallets then opened leveraged long positions totaling roughly $30 million, inflating POPCAT’s price above $0.21.
When the fabricated buy walls were removed, POPCAT’s price plummeted, triggering large-scale liquidations.
The Hyperliquid Provider (HLP), the platform’s market-making system, was forced to absorb the resulting positions due to thin market liquidity.
In total, HLP incurred losses in the region of $4.9–5.0 million.
The remaining long positions were passed to the Hyperliquidity Provider (HLP) to liquidate.
HLP appears to have lost $4.95M closing out the positions. pic.twitter.com/Qfq9jcy4Mz
— Arkham (@arkham) November 12, 2025
During the crash, POPCAT’s price fell from $0.21 to $0.13, prompting Hyperliquid to manually liquidate positions to limit further financial damage.
The attack highlighted how coordinated large-cap moves across multiple wallets can destabilize decentralized platforms.
Investigators noted similarities between this manipulation and prior market abuse patterns observed in tokens such as TST, ZEREBRO, JELLYJELLY and HIFI. Hyperliquid later reported that deposits and withdrawals were restored and normal trading resumed.
Impact on Hyperliquid and the wider DeFi market
The POPCAT episode underscores the persistent risks facing decentralized exchanges that support leveraged tokens.
Although HLP absorbed the losses and protected liquidity providers, the incident demonstrated how low liquidity and concentrated positions can amplify the effects of market manipulation.
Some commentators on Crypto Twitter suggested these attacks may aim not only for profit but also to damage the reputation of decentralized platforms.
On-chain forensic analysis is examining links between the wallets used in the manipulation and entities such as BTX Capital, but allegations remain unproven.
Hyperliquid’s response, which included a temporary suspension of the Arbitrum bridge, helped mitigate further destabilization.
Nonetheless, the event is likely to weigh on investor sentiment, particularly as retail demand for HYPE remains muted and futures open interest has contracted significantly.
Futures open interest for HYPE has shrunk from $2.08B at the end of October to $1.56B, signaling a reduction in traders’ risk appetite.
HYPE price reaction to the attack
Despite the losses, Hyperliquid’s HYPE token showed short-term resilience immediately after the incident.
Following the resolution, HYPE briefly rose from $37.77 to $39.39, suggesting broad retail confidence in the token had not been completely eroded.
However, at the time of writing, HYPE has retreated to around $38.09, pointing to a more cautious long-term outlook.
Technical indicators paint a bearish picture: HYPE is trading below the 200-day exponential moving average (EMA) slightly under $39, and it has been unable to reclaim the 50-day and 100-day EMAs near $43.
Momentum indicators such as MACD and RSI point to ongoing selling pressure. Analysts warn that a decisive break below the $35 support level could accelerate downside toward the $30 mark.