Hyperliquid Traders Face Widespread Liquidations as Oil Prices Collapse

In brief

• Hyperliquid traders faced widespread liquidations as benchmark oil prices plunged on Wednesday following a U.S.-Iran ceasefire agreement.
• The decentralized exchange’s users lost $79.7 million worth of leveraged positions while trading Brent and WTI crude oil perpetual futures.
• The last time benchmark oil prices sparked comparable liquidations on Hyperliquid, the president had unveiled a five-day pause on military strikes against Iran.

Hyperliquid traders faced widespread liquidations as benchmark oil prices plunged on Wednesday, highlighting how the decentralized exchange’s users are growing increasingly exposed to movements in real-world assets. Over the past 24 hours, nearly 3,000 users speculating on the price of Brent and WTI crude oil had their positions forcibly closed due to adverse price swings, according to data provider Allium. Meanwhile, around 2,380 users were liquidated while trading Bitcoin perpetual futures. On a notional basis, Hyperliquid users lost $79.7 million worth of leveraged positions while trading Brent and WTI crude oil perpetual futures. On the decentralized exchange, Bitcoin was the only other asset that had prompted comparable losses at $107 million.

Hyperliquid’s popularity was once rooted in cryptocurrencies, but the decentralized exchange’s users have developed a penchant for placing bets on real-world assets since the functionality was enabled by an upgrade in October. In January, Hyperliquid’s users faced a wave of liquidations as precious metals such as gold and silver retreated from all-time highs.  Benchmark oil prices plunged on Tuesday after U.S. President Donald Trump declared that Iran had agreed to a two-week ceasefire. The last time benchmark oil prices sparked liquidations on Hyperliquid, the president had unveiled a five-day pause on military strikes against Iran’s energy infrastructure. What’s more, an explosion occurred near an oil refinery in Port Arthur, Texas. On Wednesday, benchmark oil prices were on track for their biggest daily decline since the start of the COVID-19 pandemic in 2020, according to the Wall Street Journal. The outlet reported that a greater than 14% fall in crude oil prices has only occurred four other times since 1989.

Brent crude oil futures (for June delivery) were down 12.6% on Wednesday at $94.5 per barrel, Trading Economics data showed. WTI crude oil futures had plunged 15% to $96. On Myriad, a prediction market owned by Decrypt parent company Dastan, traders grew less confident that WTI crude oil futures would jump to $120 before falling to $55. They penciled in a 63% chance that WTI crude oil futures hit $120 first, down from 89% a day before. The president said that a 10-point peace plan proposed by Iran serves as a “workable basis on which to negotiate.” In recent weeks, he has insisted that the Strait of Hormuz, through which 20% of the world’s oil flows, could be reopened “with a little more time.” Less than a week ago, Myriad traders were equally split on whether the 7-day moving average of ships transiting the strait would rise above 15 before May. On Wednesday, they foresaw a 74% probability that the threshold would be met within the next 22 days.