Hyperliquid (HYPE) Plunges Below $15 Amid JELLY Delisting Fallout and Centralization Concerns

Hyperliquid's native token (HYPE) has experienced a significant downturn, falling below $15 with a nearly 10% drop in the past 24 hours

The native token of Hyperliquid (HYPE) has plunged below $15 amid intense scrutiny on the decentralized exchange following the controversial delisting of the JELLY token due to alleged market manipulation.

The latest upheaval around Hyperliquid stems from an event concerning the JELLY token, a relatively new cryptocurrency launched as part of a Web3 social media project. Combining short bets on Hyperliquid with on-chain spot buys, a trader allegedly performed a complex move that resulted in a $13.5 million unrealized loss for Hyperliquid’s automated market maker vault (HLP).

In response, Hyperliquid’s validator set convened and voted to delist the JELLY perpetual futures, effectively closing all positions and settling the market at a price significantly lower than the prevailing decentralized exchange rates.

However, this action sparked outrage among members of the crypto community who criticized Hyperliquid’s lack of discretion in unilaterally deciding to delist JELLY and force-settle positions.

Several prominent figures in the industry, including Bitget CEO Gracy Chen and BitMEX co-founder Arthur Hayes, questioned the platform’s claims of being decentralized.

Chen went as far as suggesting that Hyperliquid might be heading down the path to become “FTX 2.0,” highlighting the “immature, unethical, and unprofessional” handling of the matter and the dangerous precedent set by the forced liquidation.

Similar sentiments were expressed by Hayes, who stated that the episode showcased Hyperliquid’s centralized approach to governance.

The discussion unfolded as seven new members joined Hyperliquid’s Hyper Foundation to support the platform’s recovery efforts following the incident.

The crypto community is engaging in a lively debate on the degree of centralization in DeFi systems such as Hyperliquid, where a small group of validators can make such significant decisions.

In a move that adds another layer to the unfolding drama, Binance, the largest cryptocurrency exchange globally by trading volume, announced the listing of perpetual futures for the JELLY token shortly after Hyperliquid’s delisting.

This action drove JELLY’s spot price to surge by nearly 560%, further highlighting the volatility and the controversial nature of the events.

The fallout from the JELLY delisting has had a direct and negative impact on the native token price of Hyperliquid, HYPE.

The HYPE token price dropped by approximately 16% within hours of the incident and the subsequent criticism. It has been trading down by almost 10% in the past 24 hours, currently hovering around $14.

This sudden drop suggests a possible erosion of confidence in the platform, with some traders apparently withdrawing assets and seeking alternatives.

HYPE/USD Technical Analysis: HYPE Token Experiences Double-Digit Drop, Testing Support Levels

The substantial decline of the HYPE token below the $14 mark represents a major bearish development. The price has been steadily declining after trading at highs around $15.5 yesterday, indicating significant selling pressure.

This decline has breached predicted short-term support levels, and should the negative sentiment persist, more downside is likely.

Now trading at levels significantly lower than its all-time high of $35.02 reached in December 2024, the HYPE token suggests a possible shift in market mood toward the platform.

Traders will be keenly observing for any signs of stabilization or reversal in the coming days, as well as for potential support levels forming.

Can Hyperliquid Rebuild Trust After JELLY Fiasco?

The sudden delisting of JELLY and the subsequent price drop of the HYPE token have stained Hyperliquid’s reputation and raised serious doubts about its claims of decentralization.

While the platform’s swift response would have prevented a potential financial catastrophe, the scandal has surely tarnished user confidence and sparked a crucial discussion on DeFi’s governance.

Now Hyperliquid faces an uphill battle to regain the trust of traders and demonstrate its commitment to the values of decentralization.