JELLY Incident Fuels Crypto Market Instability as HYPE Coin Slumps 20%

The recent JELLY incident has sent shockwaves through the cryptocurrency market, stirring concerns reminiscent of the FTX collapse. Investors saw HYPE coin drop nearly 20% in a single day after centralized platform actions spurred panic selling. Further complicating the scenario, major exchanges OKX and Binance began listing the trending JELLY coin on their futures platforms, which has added to worries about its viability. Meanwhile, Hyperliquid whales executed a large short position in JELLY—incurring losses up to $15 million—while simultaneously making spot market purchases. Bitget’s CEO criticized Hyperliquid’s management of the incident, comparing it to FTX and warning that such unorthodox practices could severely undermine user trust, a cornerstone for any exchange. The unfolding events highlight not only immediate market turmoil but also deeper systemic vulnerabilities, such as complex vault designs and unrestricted position sizes that may invite manipulation. Overall, the incident is seen as a cautionary tale about the fragility of market confidence, which, if not promptly restored, could lead to prolonged instability.