Massive HYPE Short Position Sits on a Knife's Edge as Liquidation Looms

A cryptocurrency trader is now carrying an enormous short bet worth $67.1 million against HYPE, after recently doubling down with another $700,000 in shorts. The position has swollen to 2.1 million HYPE tokens, creating a high-stakes scenario that could reshape the token’s near-term price action.

The Principal Liquidation Risk That Traders Can’t Ignore

What makes this situation genuinely precarious is how close the principal liquidation threshold sits. The trader faces forced position closure if HYPE climbs just 5% from current levels—specifically in the $33.37 to $33.57 range. At today’s price of $24.86, this represents merely a $8.51 to $8.71 gain before the entire $67.1 million short gets wiped out. That razor-thin margin between current levels and liquidation is creating an extremely volatile situation.

This isn’t just about one trader’s losses. A principal liquidation event of this magnitude would trigger a cascade effect: forced buying to close the short, sudden price momentum upward, and potential triggering of other leveraged positions in the same direction.

The Mechanics Behind This High-Wire Act

The trader’s strategy—borrowing HYPE tokens, selling them at current rates, and betting on a price decline—represents aggressive bearish conviction. But the shallow cushion before liquidation reveals either exceptional risk tolerance or a hedging strategy tied to another major position. Either way, the market is now watching closely.

The liquidation zone operating so close to the current price means even routine market volatility could catastrophically impact this position. A minor rally, accumulation push, or positive news could trigger the principal liquidation within hours or minutes.

Market Fireworks When It Breaks

If HYPE’s price enters that critical $33-34 zone, watchers should brace for amplified volatility. A $67.1 million liquidation cascade would inject massive buying pressure as the short gets automatically closed, potentially creating a self-reinforcing upward move. Retail traders positioned for exactly this scenario—hunting short squeezes—could accelerate momentum further.

The token is now essentially trading around this liquidation sword of Damocles, with every percentage point of appreciation bringing closer the moment when principal liquidation forces a market reckoning.