Whale activity triggers XPL price surge
Crypto derivatives platform Hyperliquid is rolling out new risk controls after whale-driven activity caused a dramatic spike in its XPL pre-launch perpetual futures market. The sudden move triggered widespread liquidations and forced the platform to deploy its auto-deleveraging system.
According to CoinGlass, more than $17 million worth of trader positions — mostly shorts — were liquidated after XPL spiked 2.5x in minutes. Analysts noted that four addresses appeared to coordinate a short squeeze, generating over $46 million in cumulative profits.
XPL price diverges across markets
Plasma’s XPL token, still unlisted on spot exchanges, currently trades on pre-listing venues such as Hyperliquid and Binance’s pre-market platform. During Tuesday’s volatility, Hyperliquid’s XPL/USD contract surged to nearly $1.80 before correcting, followed by another spike toward $1 on Wednesday. By comparison, XPL/USD on Binance peaked at only $0.55 during the same period.
Plasma, a Bitfinex-backed Layer 1 blockchain focused on stablecoins, recently raised $373 million in an oversubscribed public sale — fueling strong market interest ahead of its token launch.
No technical failures, says Hyperliquid
Despite the turmoil, Hyperliquid confirmed through its Telegram channel that its liquidation systems worked as intended. The protocol first executed liquidations against the order book before switching to auto-deleveraging (ADL), a last-resort mechanism used to prevent bad debt when margin becomes insufficient.
The team stressed that its “hyperps” use isolated-only margin, meaning losses in XPL positions did not spill over to other markets. Hyperliquid emphasized that the system incurred no bad debt, despite the extreme volatility.
“Pre-launch markets are inherently unpredictable,” the team said, noting that its mark price formula required several minutes of elevated prices before triggering liquidations — preventing an instant wipeout.
Criticism and defense of the pre-market model
The incident sparked debate within the crypto community. Some traders argued that Hyperliquid’s lack of intervention damaged confidence in its pre-market model, while others defended the protocol’s rules-based, permissionless design.
Hyperliquid reminded users that each hyperp market carries unique risk profiles, with warnings about low liquidity, high volatility, and elevated liquidation risks. Traders, the team said, must apply proper risk management before engaging in pre-launch perpetual markets.
New safeguards to curb volatility
In response to community concerns, Hyperliquid is preparing two major updates:
- Hard cap on mark price movements – Hyperp mark prices will now be capped at 10x the 8-hour exponential moving average (EMA). While this would not have prevented the recent liquidations, the limit aims to create clearer risk boundaries for short positions and encourage liquidity during volatile swings.
- Integration of external perp data – Hyperliquid’s mark price formula will now factor in external perpetual market data, such as Binance’s XPL contracts. This is expected to improve price reliability in thin markets while maintaining existing profit, loss, and funding mechanics.
Unlike many futures platforms, Hyperliquid does not rely on external oracles for pre-launch assets. Instead, it uses its own moving average-based system to reduce manipulation risks.
HYPE token climbs despite liquidations
Interestingly, the liquidation chaos did not dampen investor sentiment around Hyperliquid itself. The platform’s native token, HYPE, surged more than 10% in the past 24 hours, reaching a new all-time high of around $51.
Key takeaway
The XPL short squeeze highlights both the opportunities and risks of trading pre-launch perpetual futures. Hyperliquid’s upcoming safeguards — tighter price caps and external data integration — aim to reduce volatility and protect traders, but the incident also underscores the unpredictable nature of crypto pre-markets.
