Introduction
The decentralized derivatives platform Hyperliquid has recently experienced a substantial financial setback, attributed to a sophisticated market manipulation known as the POPCAT attack. This incident has not only resulted in a staggering loss of approximately $5 million for the Hyperliquid Provider (HLP), but it has also raised critical concerns regarding the platform’s liquidity management and the broader implications for decentralized finance (DeFi) markets.
The Mechanism of the POPCAT Attack
On November 12, a coordinated series of manipulative trades executed by an unidentified trader exploited vulnerabilities within Hyperliquid’s liquidity structure. The trader deployed an estimated $3 million in USDC from the OKX exchange across 19 distinct wallets, thereby creating a deceptive buy wall that artificially inflated the price of the POPCAT token to over $0.21.
This orchestrated maneuver involved opening leveraged long positions totaling nearly $30 million. Once the buy wall was dismantled, the price of POPCAT experienced a precipitous decline, triggering widespread liquidations. Consequently, Hyperliquid’s HLP was compelled to absorb the resultant positions amidst an environment characterized by insufficient liquidity, culminating in losses estimated between $4.9 million and $5 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
Broader Implications for Hyperliquid and the DeFi Ecosystem
This incident starkly illustrates the inherent risks associated with decentralized exchanges (DEXs), particularly those facilitating leveraged trading. While HLP effectively mitigated immediate losses and safeguarded liquidity providers, this event underscores how thin liquidity coupled with concentrated market positions can exacerbate vulnerabilities to market manipulation.
Speculation circulates within the crypto community regarding potential motivations behind such attacks; some analysts propose that these actions may be strategically aimed at eroding trust in decentralized platforms rather than merely pursuing profit. Ongoing on-chain forensic investigations have sought to elucidate connections between the wallets involved in this manipulation and entities such as BTX Capital, although definitive conclusions remain elusive.
In response to the fallout from this attack, Hyperliquid enacted precautionary measures, including a temporary suspension of its Arbitrum bridge, aimed at curtailing further destabilization of its ecosystem. Nonetheless, investor sentiment is likely to be adversely affected, particularly as retail demand for HYPE tokens has diminished in the aftermath.
Decline in Retail Demand and Futures Open Interest
Concurrently, data indicates a significant decline in futures Open Interest for HYPE tokens, which contracted from approximately $2.08 billion at the end of October to $1.56 billion—a shift indicative of waning risk appetite among traders.
Price Dynamics of HYPE Post-Attack
In spite of the immediate financial repercussions stemming from the POPCAT attack, HYPE tokens exhibited a degree of resilience shortly thereafter. Following resolution of the crisis, HYPE prices incrementally increased from $37.77 to $39.39; however, this uptick proved ephemeral as prices subsequently retraced to approximately $38.09 at present.
The technical landscape presents a bearish outlook for HYPE tokens; currently trading below key technical indicators such as the 200-day Exponential Moving Average (EMA), which resides just below $39. The token has also failed to breach both the 50-day and 100-day EMAs located around $43.
Momentum indicators such as the MACD and RSI reveal persistent selling pressure within the market. Analysts caution that a decisive breach below the critical support level of $35 could precipitate further declines towards the $30 threshold.
