"It's been suspiciously rising lately"...Hyperliquid faces critical emergency with $130 million short liquidation

▲ Hyperliquid (HYPE)/AI-generated image

As Hyperliquid (HYPE) soared near its all-time high, the liquidation risk for trader Loracle, who holds a large short position, is increasing. Loracle sold $36.76 million worth of HYPE to defend a $103.7 million short position, but if the HYPE price continues to rise, it will be difficult to avoid forced liquidation.

Bitcoin.com reported on May 22 (local time) that on-chain data shows Loracle deposited 616,675 HYPE on the Hyperliquid platform and quickly sold most of it. The value of this volume was estimated at $36.76 million. Loracle used the proceeds from the sale to bolster the margin for a short position worth 1.8 million HYPE.

According to the article, Loracle's nominal exposure to short positions exceeds $103.7 million. HYPE recorded an all-time high near $63 on May 21 before retreating slightly. Loracle's estimated liquidation price is approximately $69.90, meaning the position could be forcibly liquidated if HYPE rises by about $12 from its current level.

A major factor driving HYPE's surge was the launch of Bitwise's spot HYPE ETF. Since its launch on May 12, the ETF has recorded a net inflow of $58.73 million. This opening of a channel for US investors within regulatory jurisdiction to gain direct exposure to HYPE is said to have led to continued buying pressure.

Another bullish catalyst is the accumulation by a wallet linked to venture capital firm a16z. On-chain trackers identified that a wallet associated with a16z accumulated over $90 million worth of HYPE since mid-April. This accumulation has made a16z the sixth largest holder of HYPE and is interpreted as a sign of institutional confidence in Hyperliquid's growth potential.

Loracle's short position had been accumulating for several weeks. He initially held a large long position but completely switched to a short position around April 20, 2026. As the HYPE price rose sharply thereafter, the trade turned unfavorable for Loracle, and margin injections like the recent $36.76 million sale only delay liquidation but do not eliminate the risk.

Bitcoin.com reported that in the past, a short position worth $36.5 million was liquidated in a single session on Hyperliquid as HYPE rose to its previous all-time high. The current market also faces a confluence of concentrated short exposure, rising token prices, and ETF inflows, leading to observations that Loracle's margin reinforcement alone may not be enough to withstand the continued buying pressure.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*