In one of the most epic trading episodes of the month, a trader with deep pockets and a wide following across DeFi analytics platforms now appears to be nearly $19 million underwater after having placed a huge leveraged short on $HYPE.
Despite this trader’s having made multiple margin top-ups to avoid liquidation, the token’s unceasing rally has turned this bet into a high-stakes and somewhat comic saga.
A $57M Short That Backfired
Beginning on May 8, the whale established a short position of 1.875 million HYPE tokens, using 5x leverage, with an opening price of $20.40 per token. Backed by an initial margin of $28.5 million, the notional value of the short approximately totaled $57.14 million.
The strategy was clear: the trader was anticipating a dramatic decline in HYPE’s price. But the market had other plans. Instead of retracing, HYPE was propelled upward by market momentum, community buzz, and a private jet full of high-profile listings. Within days, that bearish position had morphed into a financial time bomb.
HYPE’s price has risen far above the initial level at which shorts were opened, and as a consequence, those short positions have lost a considerable amount of capital. Now, with shorts held for over two weeks, the average capital lost has resulted in an unrealized loss amounting to a staggering $18.8 million.
Two Margin Top-Ups and a $32.60 Liquidation Threshold
In the whale’s desperate attempt to avert the implosion of its enormous short, it has added margin not once, but twice, since the position was first opened. Most recently, two hours ago, the whale tried to give the position more time to work—in other words, more time in hope of a market reversal—by injecting another 2.04 million USDC into the margin account.
This total capital deployed into the short now comes to over $30.5 million. The updated liquidation price now sits at $32.60, meaning if HYPE crosses this level, the trader’s entire position will be forcibly closed.
Even though maintaining this contrarian bet is becoming increasingly costly, the whale stays put, showing no inclination to cut losses or close the position. Why the whale does this is a mystery to most in the market watching it, since one can only speculate about whether the reason is conviction, hubris, or a long-term strategy.
HYPE’s Unstoppable Rise and Market Sentiment
HYPE, which was once a niche DeFi token, has transformed over the past few weeks into something of a market darling. Since early May, the token has seen significant price appreciation, driven by what seems a combination of strongly positive on-chain activity, a rapidly and successfully expanding liquidity profile, and what can only be described as a full-on, aggressive marketing campaign. This of course has its influencers and community leaders rallying round, and with a good deal of work put into generating some very covetable retail participation.
This price spike has taken short-sellers by surprise, particularly big players like the whale just mentioned. In fact, some analysts now see his short position as a cautionary tale in the risks of playing the market with high leverage in an unpredictable, sentiment-driven environment.
The reality that a singular wallet is prepared to gamble more than $30 million on just one kind of bet has ignited some discussions in cryptocurrency circles. Some of the folks who inhabit those circles see this as a sign of excessive confidence, while others interpret this wallet’s action as a kind of audacious—and perhaps brilliantly contrarian—move that might pay off if the HYPE rally turns out to be a not-so-sustainable one.
Even so, with the token trading perilously near the liquidation threshold, and the whale’s error margin growing smaller by the hour, all attention is on HYPE’s next move in the price department.
Conclusion: A Cautionary Tale of Leverage and Conviction
As it currently stands, the HYPE short held by the whale is among the most scrutinized positions within the crypto realm. With a staggering $18.8 million already counted in the loss column—and a liquidation cliff up ahead—the position serves as a cautionary tale concerning the use of high leverage in a market as volatile as crypto.
It’s yet to be seen whether the trader’s conviction will pay off or lead to a full-blown liquidation. For now, the market is rallying, and HYPE holders are in celebratory mode. Meanwhile, one determined whale is holding on against all odds with tens of millions at stake, hoping against hope that gravity will finally do its job.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
Follow us on Twitter @themerklehash to stay updated with the latest Crypto, NFT, AI, Cybersecurity, and Metaverse news!
The post Whale Faces $18.8M Loss as $HYPE Defies Bearish Bet appeared first on The Merkle News.
