A new wallet initiated a 3x leveraged short position on the XPL token on Hyperliquid after depositing 5 million USDC, indicating a potential bearish market shift.

The Event in Detail

A newly identified wallet deposited 5 million USDC onto the decentralized derivatives platform Hyperliquid. This capital was immediately used to establish a 3x leveraged short position against the XPL token. The transaction was monitored and reported by on-chain analytics firm Onchain Lens.

This significant short position follows a period where XPL, the governance and utility token of Plasma Foundation, has demonstrated considerable volatility. XPL commenced pre-market trading on Hyperliquid in August 2025, with quotes opening near $0.45 and briefly reaching $0.53. Its fully diluted valuation was estimated between $4.5 billion to $5.1 billion.

Previous incidents, such as an August 27 manipulation, saw four whale addresses execute leveraged trades on Hyperliquid, driving XPL from $0.40 to $1.80. This event resulted in significant liquidations for short positions and generated over $47 million in profit, with the primary coordinator alone securing over $15 million. This highlights the token's susceptibility to single-wallet actions due to shallow liquidity. Funding rates for XPL perpetual futures have previously reached 1,200% annualized, indicating high premiums for holding long positions. More recently, derivatives platforms have shown extreme leverage, with XPL funding rates hitting 242% APR.

Market Implications

The initiation of a 5 million USDC 3x leveraged short on XPL suggests a bearish outlook from a significant market participant. Such a substantial position carries the potential to exert downward pressure on the XPL token price, especially given its documented history of thin liquidity and sensitivity to large trades. Historical data indicates that concentrated holdings, with 70% of early deposits from just 100 wallets, pose a risk of sell pressure if large stakeholders exit post-unlock.

The volatility inherent in pre-market tokens like XPL, whose circulating supply remains at zero with airdrop allocations and venture investor tokens locked, amplifies the impact of large leveraged positions. This action could trigger cascading liquidations if the price declines, potentially exacerbating downward trends.

Broader Context

This whale activity on Hyperliquid underscores the platform's role in facilitating high-leverage derivative trading for emerging crypto assets. The incident highlights the ongoing risks associated with thinly traded assets and high leverage in decentralized finance (DeFi), emphasizing the potential for market manipulation and rapid price swings.

The monitoring of such transactions by firms like Onchain Lens demonstrates the increasing transparency and sophistication of on-chain analysis, which provides insights into potential market shifts. The event reinforces the need for robust risk management strategies for traders operating in speculative crypto markets, particularly those involving pre-market tokens with concentrated ownership and low liquidity.

Despite the specific short position, other significant whale activities have been observed on Hyperliquid. For instance, a separate whale identified as 0x7508 deposited 5 million USDC to open leveraged long positions on Bitcoin (40x), Solana (20x), and various meme coins including FARTCOIN (10x), PUMP (5x), PEPE (10x), and LAUNCHCOIN (3x). This broader pattern indicates substantial institutional and whale interest in leveraging positions across different asset classes on decentralized exchanges.