☰
CoinGlass data shows that JELLYJELLY was among the most liquidated assets in the past 24 hours, ranking just below Bitcoin (BTC) and Ethereum (ETH) in total liquidation volume.
Jelly-My-Jelly (JELLYJELLY) surged more than 75% during U.S. market hours on Wednesday, delivering significant gains for traders but putting pressure on Hyperliquid Vault.
The meme coin is built on the Solana blockchain by Venmo co-founder Iqram Magdon-Ismail and former Facebook Vice President of Product Management Sam Lessin.
According to a post on X by blockchain security company Three Sigma, the fund had automatically taken a $5 million short position in JELLYJELLY, resulting in an unrealized loss of $13.24 million.
A short position is a bet that an asset’s price will decline. However, JELLYJELLY’s sharp rally forced Hyperliquid Vault into deep losses, fueling speculation that the surge was a coordinated effort to trigger liquidations.
CoinGlass data shows that JELLYJELLY was among the most liquidated assets in the past 24 hours, ranking just below Bitcoin (BTC) and Ethereum (ETH) in total liquidation volume.
The token saw $14.49 million in liquidations, which included $8.6 million from short positions. This aligns with the narrative of a short squeeze attack described by on-chain analyst ai_9884xtpa in a post on X, in which aggressive buying forces short sellers to cover their positions, driving prices even higher.
The analyst described the situation as an orchestrated attack on Hyperliquid Vault, calling it “organized, premeditated, and more scheming” than previous attempts to drain the fund’s liquidity.
They pointed to a previous instance where a whale using 50x leverage on Hyperliquid triggered liquidations on 160,000 ETH long positions, extracting $1.857 million in profits.
While that attack targeted Ethereum (ETH), this time, the focus was on JELLYJELLY, a lower-liquidity meme coin that is more susceptible to price manipulation.
According to the analyst, blockchain data suggests a key address coordinated with spot markets to briefly push JELLYJELLY’s price lower after the short position was established.
This created a temporary illusion of profit, allowing the trader to withdraw $2.76 million in margin. However, as the position was liquidated, Hyperliquid Vault was left to absorb the losses.
Two rounds of aggressive buying during U.S. morning trading hours further exacerbated Hyperliquid Vault’s floating losses, according to the analyst.
However, Hyperliquid reportedly delisted JELLYJELLY and settled the position at a favorable price without losing money because it has the ability override contract prices through a mechanism that involves the use of oracles and a unique liquidation process.
In fact, according to a post on X by Doug Colkitt, founder of Ambient Finance, Hypervault force-closed the Jelly market and overrode the oracle price of about $0.50 to settle at $0.0095, leaving the attacker with a slight loss.
On Stocktwits, retail sentiment around Jelly-My-Jelly’s token climbed higher but remained in ‘bearish’ territory amid tepid levels of chatter.
The liquidity of Hyperliquid Vault has come under scrutiny numerous times, particularly during large liquidation events. Analysts have pointed out that when faced with substantial trades, the vault may struggle to process liquidations quickly enough, leading to severe slippage and losses.
“You can’t absorb size like a market maker without the protections market makers use,” said Three Sigma.
Despite more than doubling in value over the past month, JELLYJELLY remains down 87% from its all-time high of $0.22, reached on Jan. 30, shortly after its launch on Jan. 29.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<
Read also: Dogecoin, Shiba Inu Tokens See Double-Digit Gains As Bitcoin Holds Steady At $88K – Retail’s Feeling Bullish
subscribe to Asianet Newsable WhatsApp channel by clicking here.