Hyperliquid Crashes by 17% as Crypto Market Tanks – How Low Can HYPE Go?

However, HYPE’s decline has been much faster and sharper than that of other altcoins and even competing decentralized exchanges (DEXs).

Trading volumes for HYPE have nearly tripled in the past 24 hours and currently stand at $200 million.

The aggregated market cap of cryptocurrencies has gone down by 3.9% in the past day alone as Trump’s trade war has increased the odds that inflation could rise in the United States in the following months.

Tariff increases will be imposed almost immediately on top commercial allies like China. These rushed measures have scared market participants as they could have huge, and probably unforeseen, consequences to the country’s economy.

Meanwhile, the Federal Reserve could opt not to cut interest rates this year as the current scenario demands a more cautious approach.

Lower crypto valuations have a direct impact on Hyperliquid’s trading commissions and revenue as the layer-one blockchain collects a percentage fee on every trade. If the value of cryptos declines so will trading volumes and, subsequently, the platform’s income.

JELLY Incident Inflicts Damage on Hyperliquid’s Reputation

Hyperliquid has faced operational issues lately. The latest incident involved a trading position on JELLY that a bad actor opened and self-liquidated, causing the price of the asset to skyrocket in just a few hours and inflicting significant losses on the Hyperliquid Foundation, as the latter was forced to make traders whole for allowing the exploit.

In summary, the same user opened two long positions and one short position of similar values. A short position worth $4.1 million was opened first, causing the price of the illiquid JELLY token to drop. Then, the two long positions (worth around $4.1 million as well) were opened and triggered a price surge.

As the price of JELLY increased, the short-position was liquidated and further accelerated the token’s gains. As a result, this trader reaped huge gains in just a few hours. As Hyperliquid realized the exploit, it acted quickly to close the JELLY market and blocked the three accounts involved.

The trading platform was heavily criticized by the head of Bitget, Gracy Chen, who categorized its way of handling the event as “immature, unethical, and unprofessional.”

As trading volumes skyrocket today, investors could be concerned that Hyperliquid could be once again targeted by organizations like the North Korean Lazarus Group, who are experts in exploiting these kinds of weaknesses.

The protocol has been strengthening its policies to prevent this kind of incident but they seem to be learning and adjusting as they go and investors don’t seem to be willing to hold to accompany them in that process as reflected by today’s HYPE drop.

Bullish Pattern Pops Up in Hourly Chart – Can HYPE Recover?

The hourly chart for HYPE shows that a falling wedge pattern has emerged after yesterday’s sharp drop.

This is typically a bullish setup as the sell-off has gone too far too fast and buyers typically step in to enter long positions at a bargain.

However, the latest incidents affecting Hyperliquid could justify this kind of accelerated decline. For now, the outlook is still bearish as the Relative Strength Index (RSI) remains below the signal line and the MACD’s histogram is still neck-deep in negative territory.

Although HYPE is still trading 250% above its all-time low of $3.20 per token. This is the lowest level that the token has reached in 2025.

This emphasizes how strong negative momentum is for HYPE and could point to further losses down the road, especially if further incidents like the one involving JELLY take place in the future.