The Hyperliquid platform is facing serious pressure after a large-scale attack related to the POPCAT token. The hack caused multimillion-dollar losses to the project and alarmed investors.
Attackers targeted the liquidity provider system, exposing weaknesses in risk management. The incident undermined trust in the project and cast doubt on retail traders’ interest in the HYPE token, further increasing negative sentiment in the market.
The POPCAT attack cost Hyperliquid nearly $5 million
The incident occurred on November 12, when an unknown trader began aggressive price manipulation of the POPCAT token. They used several wallets to create artificial demand, forming a fake buy wall.
According to on-chain analysts, about $3 million in USDC was withdrawn from the OKX exchange for this scheme. These funds were distributed among 19 addresses, which then opened high-leverage longs totaling almost $30 million. This sharply pushed the POPCAT price above $0.21.
After the buy wall disappeared, the token price collapsed. This triggered a wave of liquidations. The Hyperliquid market system responsible for providing liquidity (HLP) was left without sufficient coverage and was forced to take on losing positions.
According to analysts, the final damage to HLP amounted to from $4.9 to $5 million.
POPCAT price crashed, Hyperliquid had to intervene manually
During the crash, the price of POPCAT fell from $0.21 to $0.13. To limit the consequences, the Hyperliquid team was forced to manually close open positions and prevent further losses.
This case showed how vulnerable decentralized protocols are to coordinated actions when large capital is distributed among many wallets and aggressive manipulation is launched.
See also: Self raises $9 million to develop ZK digital identity platform
On-chain traces of the attack resemble similar schemes previously recorded with tokens such as TST, ZEREBRO, JELLYJELLY and HIFI. Despite the serious failure, the Hyperliquid team emphasized that the platform’s operations have been fully restored. Deposits and withdrawals have been unblocked, and trading has returned to normal.
What the incident means for Hyperliquid and the DeFi market
The situation with POPCAT once again reminded of the risks faced by decentralized platforms working with leveraged tokens. Although the HLP system was able to maintain liquidity and absorb all the losses, the incident itself showed how dangerous thin order books and highly concentrated positions are. These are exactly what make the market vulnerable to manipulation.
There is already an opinion on X that such attacks may be aimed not so much at making a profit as at undermining trust in decentralized platforms. On-chain researchers also found suspicious links between wallets involved in the attack and structures associated with BTX Capital. But at the moment, these assumptions have no confirmed evidence base.
See also: Chainlink may get an ETF, but investors keep selling LINK
In response to the incident, the Hyperliquid team suspended the bridge on Arbitrum to prevent further destabilization. The measures worked and the protocol was stabilized, but the consequences of the attack may continue to affect investor sentiment for a long time.
This is especially noticeable against the backdrop of declining interest in the HYPE token. Over the past month, open futures positions have sharply decreased. At the end of October, the OI figure was $2.08 billion, but by now it has dropped to $1.56 billion. This indicates that traders are not ready to take risks and are currently exiting the asset.
How HYPE reacted to the attack
Despite the platform’s significant losses, the HYPE token showed relative resilience in the first hours after the attack. After the consequences of the incident were eliminated, its price even rose slightly: from $37.77 to $39.39. This may indicate that basic trust from retail holders is still present.
However, the positive momentum was short-lived. By the time of publication, the price had adjusted to $38.09, reflecting a more restrained market outlook for the medium term.
The technical picture is not in favor of growth so far. HYPE is trading below the 200-day exponential average, which is just below $39. The token also failed to overcome the 50- and 100-day EMA levels located around $43, indicating continued overhead pressure.
Hyperliquid price dynamics. Source: CoinMarketCap
Additional signals come from the MACD and RSI indicators. Both continue to indicate seller dominance. Analysts warn that a break of support at $35 could strengthen the downward movement and lead to a decline down to $30.
