One of the largest traders on Hyperliquid continues to hold a massive short position on HYPE, despite a loss of more than $22 million. While the token is hitting new local highs, the market is increasingly discussing the likelihood of another short squeeze.
The situation looks especially tense due to the scale of the position. Wallet ‘0x8ef…’ holds a short of about 1.8 million HYPE worth around $103 million. The average entry price is near $44.96, while the token itself has already risen above $57.
Trader Keeps Increasing Short
The most unusual thing about this story is that the trader is not reducing the position, but instead is gradually increasing pressure on the market. In the morning, the short volume was estimated at about $95 million, but later the position grew to more than $100 million.
The current loss has already exceeded $22 million. The funding rate payouts of about $204,000 have almost no impact on the overall picture.
At the same time, liquidation of the position could occur at around $69 per token. If HYPE continues to rise, pressure on the short seller will increase sharply.
HYPE Became One of the Strongest Tokens of the Year
Since the beginning of 2026, HYPE has grown by about 134%, while the entire crypto market has declined by about 16% over the same period. The main momentum came in May, when the market shifted its focus to the launch of spot ETFs on HYPE in the US.
Additional interest was sparked by the role of Coinbase, which became the official operator of the USDC treasury infrastructure within the Hyperliquid ecosystem.
Since the ETF launch on May 12, funds have already attracted about $58.7 million. Moreover, daily inflows continue to gradually increase, supporting demand for the token itself.
Whales Keep Buying HYPE
Against the backdrop of rising prices, large wallets have become more active. According to Arkham, an address associated with Galaxy Digital bought about 158,000 HYPE worth about $8.8 million in just a few hours.
At the same time, a new wallet withdrew more than 536,000 HYPE worth about $29.8 million from Coinbase in two days. In total, large participants have accumulated or withdrawn from exchanges almost 695,000 tokens worth about $38.7 million.
This is an important signal for the market. When large players withdraw assets from exchanges, it often indicates long-term holding rather than preparation for sale.
Short Squeeze Has Already Started Driving the Market
CoinGlass data shows that over the past 24 hours, Hyperliquid recorded liquidations of about $36.3 million. Of this, about $34.3 million was in short positions.
In fact, almost the entire liquidation volume is related to short sellers. This confirms that HYPE’s growth is already partially fueled by forced closure of short bets.
The higher the price rises, the greater the pressure on the remaining sellers. If the market continues to grow, liquidations may accelerate and create a new wave of buying.
Technically, the Market Looks Overheated
Despite the strong momentum, the HYPE chart is starting to show signs of overheating. The token has approached the upper boundary of the ascending channel around the $59–60 zone.
This range coincides with the historical high of September 2025. Back then, after reaching this area, HYPE collapsed by more than 65%.
The relative strength index (RSI) has risen to about 77 — one of the highest levels in the past year. Usually, such values indicate an overbought market and increase the likelihood of profit-taking.
Analysts Allow for a 20% Correction
If the market starts to cool, the nearest important support zones may be around $51.5 and then $45. These areas coincide with key Fibonacci retracement levels and the lower boundary of the ascending channel.
In this scenario, HYPE could lose up to 20% from current levels. For the major short seller, this would be a significant relief: part of the current losses would be reduced by about $10–22 million.
However, even if it falls to $45, the position still will not turn into a full profit. For that, the price would have to drop below the average entry point of about $44.96.
The Market Is Caught Between a Short Squeeze and Overheating
Right now, HYPE looks like one of the most tense markets in the altcoin sector. On the one hand, ETFs, whale activity, and short liquidations continue to support growth.
On the other hand, technical indicators are starting to show overheating, and the price is approaching a historically difficult resistance zone.
That is why the coming days may be crucial. If buyers push through the $60 area, the market could see a new wave of liquidations and an acceleration of growth. But if momentum starts to weaken, HYPE risks moving into a deep correction after too sharp a rally.
Read more: Bitcoin Held $76,000 but the Market Is Not Ready to Grow Yet
