Short Description: A crypto whale’s massive $2 billion leveraged bet on Ethereum backfired spectacularly this week, resulting in a $686 million loss after prices crashed.
Read Time: 3 minutes 15 seconds
Main Article:
An ether (ETH) bull whale learned a brutal lesson in crypto market volatility this week. Trend Research, a firm led by Liquid Capital founder Jack Yi, saw its highly leveraged long position on Ethereum liquidated, resulting in a staggering loss of $686 million. This event starkly highlights the immense crypto market risk inherent in using excessive leverage, even for sophisticated players. The firm had built a towering $2 billion position by borrowing stablecoins against its ETH holdings on the DeFi lending protocol Aave—a strategy known as “looping” that amplifies gains but also catastrophically multiplies losses when prices fall.
The Ehereum price action proved fatal for the bet. After an initial dip below $4,000 in October failed to quickly rebound as anticipated, ETH continued to slide. The critical moment arrived in early February 2025, when prices plunged to a multi-month low of $1,750. As the value of their ETH collateral shrank relative to their fixed debt, the position became underwater. To avoid a complete wipeout, Trend Research was forced to sell over 300,000 ETH—worth approximately $700 million—to repay its debt on Aave, moving the assets to Binance in a five-day fire sale. The firm is now left holding a mere 1.463 ETH.
Despite the monumental loss, founder Jack Yi framed the move as a risk management tactic rather than a surrender. In a post on X, he reaffirmed an ultra-bullish long-term outlook, predicting ETH above $10,000 and Bitcoin (BTC) surpassing $200,000. He characterized the current market volatility as a typical shakeout phase that often precedes a powerful rebound. This incident serves as a potent reminder that while the crypto market’s potential for outsized returns is alluring, the dangers of leverage can swiftly turn a bullish conviction into a million-dollar horror story.
Short Summary:
Trend Research’s $686 million loss on a leveraged Ethereum bet is a stark case study in crypto volatility and risk. The firm used a “looping” strategy on Aave to build a $2 billion long position, which was liquidated as ETH prices crashed. While the firm maintains a bullish long-term outlook, the event underscores the critical importance of risk management in the highly leveraged and unpredictable DeFi and cryptocurrency markets.
