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Hyperliquid Tightens Trading Rules After Brutal $4M Loss – What’s Next?

While headlines touting a $4 million loss may lead traders to rule out Hyperliquid, the market reaction has been quite the opposite.

Junior Content Creator

Harvey Hunter

Junior Content Creator

Harvey Hunter

About Author

Harvey Hunter is a Junior Content Creator at Cryptonews.com. With a background in Computer Science, IT, and Mathematics, he seamlessly transitioned from tech geek to crypto journalist.

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Last updated:

March 13, 2025

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Hyperliquid Tightens Trading Rules After Brutal $4M Loss

Hyperliquid has tightened trading rules after its liquidity pool (HLP) took a $4 million hit during a whale liquidation event, but its front-running altcoin may have ultimately benefited.

While the news initially sparked a 15% crash, the hours since have seen the HYPE price surge 16% to a $14 peak—the first relief from its month-long free fall.

Hyperliquid remains the leading perpetual futures exchange, yet retail liquidity has thinned under heavy market FUD.

As the bull market matures, economic concerns—Trump’s “tariff war,” NATO tensions, and recession fears—have taken center stage, knocking HYPE down 35% since March began.

Lesson Learned: How a $4M Loss Turned ‘Buy-the-Dip’ Event

A “whale” wallet on Hyperliquid opened a $200 million highly leveraged 50x long ETH position, resulting in a $4 million loss for one of the protocol’s vaults.

By withdrawing most of his collateral, and liquidating his own position, the trader effectively cashed out without incurring slippage, shifting the entire loss onto the HLP liquidity pool.

In response, Hyperliquid clarified on X that this was not an exploit but a predictable consequence of its trading mechanics under extreme conditions.

To be clear, users can still trade with the same leverage, up to 40x. This change only affects removing unrealized pnl on open positions (e.g., withdrawing).
— Hyperliquid (@HyperliquidX) March 13, 2025

Starting March 15, the platform will require traders to maintain a 20% minimum collateral margin on certain open positions to prevent similar incidents.

Prominent DeFi commentator Aylo defended the event as a valuable stress test, arguing that the 1% hit to HLP was a “very reasonable price” to expose and address protocol vulnerabilities.

HYPE Price Prediction: Is This a Bottom for Hyperliquid?

It does indeed seem that the market reaction has knocked HYPE out of its month-long lull, posing a potential breakout of the descending broadening wedge that has guided its decline.

HYPE / USDT 4H chart, descending broadening wedge. Source: Binance.

The Relative Strength Index (RSI) has sharply rebounded from oversold territory, reclaiming the neutral 50 mark for the first time this month—a sign that selling pressure is exhausted.

More so, the MACD line has formed a golden cross, surpassing the signal line after weeks of sideways movement without a decisive trend.

If this momentum holds, Hyperliquid could climb to retest the wedge’s upper resistance. A breakout from there targets $22.25, marking a 60% gain from current levels.

While patching vulnerabilities may improve sentiment, broader economic concerns may cap upside potential—HYPE could retrace to $12 or further to retest the pattern’s lower support.

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With some analysts forecasting BTC highs of $250,000 this cycle, BTCBULL could become a Bitcoin Maxi’s best friend.

With almost $3.6 million raised in its initial weeks, the project is already gaining strong momentum—potentially credited to its 119% APY on staking that rewards early investors.