- Ether’s sharp decline led to a $2 billion leveraged long position being partially liquidated.
- The trading firm Trend Research lost approximately $686 million and moved $700 million worth of ETH to repay debt.
- The event highlights the extreme volatility of crypto markets and the persistent risks of leveraged loop strategies.
This week, a massive bet on ether went spectacularly wrong, resulting in a multi-million dollar loss for trading firm Trend Research as the cryptocurrency’s value tumbled to its lowest level since April according to data from Arkham. The firm, led by Liquid Capital founder Jack Yi, had built a leveraged long position reportedly worth $2 billion by borrowing stablecoins against its ether collateral from DeFi giant Aave, expecting a quick rebound. However, the anticipated recovery never materialized as prices continued to fall, endangering the position’s collateral ratio.
Consequently, as ether slid from over $4,000 down to $1,750 this month, the collateral backing the loan shrunk while the debt remained fixed. The firm was forced to take action, transferring over 300,000 ether worth roughly $700 million to an exchange to repay its debt and avoid full liquidation. Data from Bubble Maps indicated the firm moved 332,000 ETH to Binance over five days, leaving it with a negligible holding and an estimated loss of $686 million.
Meanwhile, Jack Yi characterized the sales as a necessary risk-control measure, stating “We’re just making some adjustments to control risk, with no change in our expectations for the future mega bull market,” in a post on X. He further noted that volatility remains a defining feature of the crypto market, historically shaking out many bullish positions before a strong rebound. This event starkly underscores that despite lessons from past cycles, traders continue to pursue high-risk leveraged strategies that can explode during downturns.
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