On May 31, Hyperinsight reported that the largest short seller of HYPE, known as 'Trader Loracle,' has been reducing their short positions for nine hours, with reductions ranging from $400,000 to $1.4 million per transaction. According to BlockBeats On-chain Detection, the trader has reduced their short positions by $7 million, leaving a remaining short position valued at $108 million, with an unrealized loss of $34.6 million. Approximately $23 million of their $27 million margin is being used to maintain this position.
Additionally, 893,000 HYPE tokens, valued at approximately $59 million, were transferred to their HyperEVM address today, with no further actions taken on the spot position. Last month, the trader unlocked a total of 1.115 million HYPE tokens, valued at approximately $63.51 million, over two instances. On May 21, they sold 557,000 HYPE tokens, valued at approximately $33.35 million.
Market expectations suggest that Loracle may sell the newly unlocked 893,000 HYPE tokens. This potential sale could coincide with further reductions in short positions, as failing to cover the shorts while selling the spot could expose the $104 million HYPE short position to a naked short risk. If a short squeeze occurs, potential losses could exceed $100 million, potentially wiping out all spot gains.
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