The POPCAT manipulation caused the Hyperliquid HLP to absorb $5M in losses.
Hyperliquid’s token price currently trades below key EMAs amid bearish momentum.
HYPE’s retail demand has dropped, and futures Open Interest has fallen to $1.56B.
Hyperliquid price has come under intense pressure following a sophisticated POPCAT attack that left the decentralised derivatives platform reeling from multi-million-dollar losses.
The POPCAT hack, which targeted Hyperliquid’s liquidity provider system, exposed vulnerabilities in Hyperliquid’s risk management while raising concerns about retail demand and overall market sentiment for HYPE tokens.
POPCAT attack led to a $5M HLP loss
The POPCAT attack unfolded on November 12, when a trader executed a series of manipulative trades across the POPCAT token market, using multiple wallets to create an artificial buy wall.
According to on-chain analysts, the trader deployed roughly $3 million in USDC from the OKX exchange, distributing it across 19 separate addresses.
These wallets then opened nearly $30 million in leveraged long positions, inflating the price of POPCAT to over $0.21.
Once the buy wall was removed, the POPCAT price plunged sharply, causing mass liquidations.
Hyperliquid’s market-making system, Hyperliquid Provider (HLP), was forced to absorb the resulting positions due to thin liquidity in the market.
In total, HLP incurred losses of approximately $4.9–$5 million.
The remaining long positions were passed to the Hyperliquidity Provider (HLP) to liquidate.
HLP appears to have lost $4.95M closing out the positions. pic.twitter.com/Qfq9jcy4Mz
— Arkham (@arkham) November 12, 2025
During the crash, the price of POPCAT fell from $0.21 to $0.13, leaving Hyperliquid to manually close positions to prevent further financial damage.
The attack highlighted how coordinated movements of large capital through multiple wallets can destabilise decentralised platforms.
Looking at how the attack unfolded, there are connections to prior manipulative behaviour observed on tokens such as TST, ZEREBRO, JELLYJELLY, and HIFI, although Hyperliquid emphasised that deposits and withdrawals were ultimately restored and normal trading resumed.
Implications for Hyperliquid and DeFi markets
Notably, the POPCAT attack underscores ongoing risks for decentralised exchanges that handle leveraged tokens.
While HLP successfully absorbed the losses and protected liquidity providers, the event demonstrates how thin liquidity and concentrated positions can amplify the effects of market manipulation.
Some commentators on Crypto Twitter have suggested that such attacks may not always be profit-driven, but rather aimed at undermining the reputation of decentralised platforms.
On-chain forensic analyses have scrutinised links between wallets used in the manipulation and entities such as BTX Capital, though allegations remain unproven.
Hyperliquid’s response, including a temporary pause on its Arbitrum bridge, helped mitigate further destabilisation.
However, the incident is likely to weigh on investor sentiment, especially as retail demand for HYPE has remained low following a significant reduction in futures Open Interest over the past month.
Futures Open Interest for HYPE has also contracted from $2.08 billion at the end of October to $1.56 billion, signalling declining risk appetite among traders.
HYPE price reaction to the attack
Despite the loss, Hyperliquid’s HYPE token showed relative resilience in the immediate aftermath.
HYPE price rose modestly from $37.77 to $39.39 following the resolution of the attack, indicating that broader retail confidence in the token remained intact.
However, the token has since pulled back to around $38.09 at press time, hinting at a cautious long-term outlook.
Technical indicators paint a bearish picture, with HYPE trading below its 200-day Exponential Moving Average (EMA) just below $39 and failing to surpass the 50 and 100-day EMAs around $43.
Momentum indicators, including the MACD and RSI, suggest persistent selling pressure, and analysts warn that a decisive break below the $35 support level could accelerate a decline toward the $30 mark.
