The recent plunge in ether below the $2,000 mark has exposed the risks of aggressive leverage in crypto markets, leaving one major trading firm facing an estimated $686 million loss.
Leveraged Ether Bet Unravels Amid Market Downturn
Trend Research, a trading firm led by Liquid Capital founder Jack Yi, had accumulated a massive leveraged long position in ether worth roughly $2 billion. The strategy relied on borrowing stablecoins against ETH collateral through decentralized lending protocols, effectively looping exposure to amplify potential gains.
That structure came under severe pressure as ether continued to slide instead of rebounding. Prices fell steadily through recent months before accelerating lower alongside bitcoin. When ETH briefly dropped to around $1,750, the value of the collateral eroded while the firm’s debt remained unchanged, sharply increasing liquidation risk.
Forced Sales and Heavy Losses
To manage mounting risk, Trend Research began unwinding the position. On-chain data from bubblemaps more than 300,000 ETH was transferred to centralized exchanges over several days, likely to repay outstanding loans. The rapid deleveraging locked in losses estimated at $686 million.
Despite the scale of the loss, Yi characterized the sales as a necessary risk-control step rather than a change in long-term conviction. He reiterated a strongly bullish outlook, projecting ether prices above $10,000 and bitcoin beyond $200,000 in a future bull cycle.
The episode highlights how volatility and leverage remain defining forces in crypto markets, capable of turning high-conviction trades into costly outcomes within days.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.