Source: Cointelegraph Original: "{title}"

Markus Thielen, head of 10x Research, pointed out in a report on March 17 that the crypto whale tracking feature based on the Hyperliquid blockchain allows traders to launch a "decentralized" joint attack targeting whales holding high-leverage positions, in order to force them into liquidation.

Hyperliquid, as a blockchain network focused on trading, allows traders to publicly view the positions of whales. Since these positions are leveraged, the market can assess their liquidation levels unless the position holders add margin.

Source: 10x Research

He said, "This transparency provides an opportunity for coordinated action, where the trader community can intentionally target these stop-loss levels to trigger liquidations."

In the crypto market, it is widely believed that whales holding large amounts of assets can influence the market through their trading strategies, such as stop-loss hunting, deliberately triggering stop-loss orders of other traders and liquidating their positions.

Thielen stated that recent trader behavior suggests this power balance may be shifting. He added, "In fact, stop-loss hunting is being 'decentralized,' with even ad-hoc organized traders starting to play a role that was once primarily handled by the market-making desks or financial teams of exchanges, which was a common practice before stricter regulatory scrutiny."

In an interview with Cointelegraph, Thielen mentioned that while it is still unclear whether this activity will spread widely on-chain, as always, transparency may bring a double-edged sword effect.

This is not the first time that small traders have attempted to take down large entities through coordinated trading strategies.

Thielen noted that the behavior of crypto traders trying to liquidate whales is reminiscent of the GameStop short squeeze event. In that incident, small traders fought back against Wall Street shorts by buying GameStop stock, driving the price to a historic high of over $81 and forcing the shorts to cover.

He said, "This reminds me of the dynamics during the GameStop event in 2020 and 2021, when aggressive short squeezes drove prices up rapidly."

"When stop-loss levels are triggered, prices often accelerate in that direction, providing liquidity for others to close their positions. We have seen similar strategies employed by market makers and exchanges in the crypto space over the years."

On March 16, a cryptocurrency whale known for opening high-leverage positions on Hyperliquid opened a 40x leveraged short position of over 4,442 Bitcoin at a price of $84,043, worth over $368 million. This position would face liquidation if the Bitcoin price exceeds $85,592.

This move did not go unnoticed, as a pseudonymous trader CBB called on the X platform to assemble a well-funded trading team to attempt to liquidate this whale's position.

Source: CBB

Thielen stated in the 10x report that on March 16, Bitcoin rose 2.5% within minutes, partly due to coordinated efforts through Hyperliquid aimed at liquidating a whale's Bitcoin perpetual contract short position. Subsequently, this whale increased its position to $524 million, and according to CoinGecko, it was once close to the target of whale hunters when the Bitcoin price briefly reached $84,583.84.

Source: CRG

However, some speculate that this exposed short position may have been intentional.

Hedge fund trader Josh Man stated in a post on X on March 17 that this whale might be intentionally trying to get liquidated.

He said, "This is a rather rare and not widely used self-liquidation technique, and the current situation seems to resemble this."

"In this case, the seller is essentially creating a 'bomb' with the aim of triggering a market rebound by liquidating their own short position. It can be speculated that they may also hold a large long position as a hedge outside of the short position."

Source: Josh Man

Related: From derivatives indicators, Bitcoin has a chance to return to $90,000.

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