From February 1 to February 6, in East 8 Time, Trend Research, under Yi Lihua, was fully exposed to large-scale deleveraging actions on ETH both on-chain and in the public opinion arena: According to multiple media reports, it sold approximately 255,000 ETH in just a few days, with an average transaction price of about $2168, resulting in a total paper loss of approximately $763 million, which includes about $258 million in realized losses and about $505 million in unrealized losses (all from a single source, with a risk of data deviation). Ironically, after the drastic stop-loss, Trend still holds about 396,000 ETH at a cost price of about $3180, becoming a typical specimen of "self-rescue but being backfired" in the high-leverage era. A year ago, Trend had just locked in a profit of $315 million by building positions in the $1000-2000 range and liquidating near $4000, being regarded as a representative of "smart money." Now, however, it has heavily leveraged near the previous high of ETH, ultimately suffering a severe stop-loss, creating a stark contrast between the two rounds of operations. The market is now undergoing a delayed reflection on how this institutional self-rescue action amplified the current deleveraging storm in ETH.
From $4000 Top Escape Winner to…
● Formation of the "Smart Money" Persona: In the last market cycle, Trend gradually built positions in ETH in the $1000-2000 range and chose to significantly reduce positions when the price surged to around $4000. According to several media estimates, this complete low-buy high-sell strategy secured them a considerable profit of about $315 million, quickly shaping their image in the community and institutional circles as having a "high win rate with excellent timing."
● Key Turning Point in This Round: In the new round of price increases, as ETH approached the previous high range, Trend chose a path that was completely opposite to the last time—leveraging to go long on ETH through lending platforms like Aave, continuing to increase leverage in a phase where the price no longer had a clear valuation advantage and volatility was increasing. This decision point became the starting point for a series of subsequent chain reactions.
● Post-Event Reflection and Unverified Claims: According to public reports and market narratives, Yi Lihua was accused of admitting on social media that "it was a wrong decision to heavily go long after ETH peaked," but this statement is still unverified and cannot be considered a confirmed fact. However, this claim has reinforced the impression in public opinion that "leverage was chosen even when the price was close to the top," providing an emotional anchor for external interpretations of their decision-making errors.
● Shift in Mindset and Risk Preference: Unlike the previous round where they actively and calmly reduced positions at high levels, this time Trend continued to pile on leverage at high prices, showing a clear increase in risk preference and an illusion of win rate—previous success may have unconsciously amplified their confidence in their judgment, leading them to shift from "profit-taking by reducing positions" to "attempting to press further above the previous high." This mismatch in psychology and positions laid the groundwork for the forced deleveraging and liquidation risks discussed later.
255,000 ETH Dump…
● Selling Rhythm and Scale: According to multiple media analyses, from February 1 to February 6, Trend sold a total of about 255,000 ETH, with an on-chain average transaction price of about $2168. This scale of selling is extremely large for a single institution, equivalent to continuously exerting heavy pressure on the daily trading volume, and it concentrated in a downward price range, sharply increasing market attention to their "dumping to stop-loss" narrative.
● Generation Mechanism of Negative Feedback: During a period when ETH prices were already in a downward phase, such a concentrated sell-off directly collided with a large but shallow market liquidity pool, causing buy orders to be unable to fully absorb at relatively ideal prices, forcing them to seek counterparties at continuously declining order prices. The result was a rapid price drop, triggering more panic selling and passive position reductions. Trend's concentrated stop-loss not only failed to "exit at the right moment" but also compounded with insufficient liquidity, creating a typical negative feedback loop.
● Institutional Self-Rescue Sample from the Market Perspective: In this round of severe volatility, analysts like Yu Jin publicly referred to Trend's actions as "the most typical institutional self-rescue case in this round of ETH deleveraging storm." The key to this evaluation is that Trend was not simply passively liquidated; rather, when facing leverage pressure and liquidation warnings, they actively chose to sell off large amounts to protect remaining assets, but in practice, this further amplified the market's downward trend, becoming one of the triggers for other leveraged positions to be trampled.
● The Game of Active Stop-Loss vs. Passive Liquidation: For large leveraged institutions, the logic of actively dumping to reduce leverage is to preemptively shrink risk exposure before liquidation, buying time for survival; however, when positions are comparable to market depth, this action itself can significantly drag down prices, making the positions that have not yet been closed face worse market performance. Trend's sale of 255,000 ETH was both a "life-saving stop-loss" and inevitably raised the liquidation risk of their remaining leveraged positions, forming a typical paradox of "putting out a fire but igniting a wildfire."
$763 Million Paper Loss and Liquidation…
● Composition of the $763 Million Loss: According to estimates from a single source, Trend's total loss on ETH this round is approximately $763 million, of which about $258 million is the realized loss locked in through actual sales, and about $505 million corresponds to the unrealized loss calculated based on the current price of the high-cost positions still held. This data point has not yet been cross-verified by multiple parties, so readers should maintain a cautious attitude towards specific figures while focusing on the judgment that "the loss scale is in the tens of millions of dollars."
● Time Pressure of 396,000 High-Cost Positions: According to multiple media reports, after the large-scale stop-loss, Trend still holds about 396,000 ETH, with a cost price of about $3180. This means that even if ETH prices gradually recover in the future, it will take a considerable amount of time to return to this cost range, and it requires high demands on the macro environment, capital flow, and market sentiment. The long-term pressure of high-cost positions on the balance sheet is not only a paper loss but also a continuous erosion of time value and opportunity cost.
● Liquidation Range and Technical Background of Leveraged Positions: Research briefs indicate that Trend's leveraged long positions on platforms like Aave face liquidation risks in the range of about $1509-1800, with some opinions suggesting that the liquidation price may concentrate around $1560, but these specific price points are still unverified and should not be regarded as precise liquidation lines. A more reasonable understanding is to view it as a technical background indicating that "when ETH falls into this price range, leveraged positions will trigger concentrated liquidations," explaining why Trend was forced to accelerate stop-loss as prices approached this danger zone.
● Tug-of-War Between Price, Margin, and Liquidation Threshold: For high-leverage positions, each round of price declines compresses margin buffers, sharply shortening the distance between the liquidation threshold and the current price. Trend's choice in early February was essentially a back-and-forth weighing between "continuing to hold and betting on a rebound, but possibly being wiped out by a large bearish candle" and "actively selling to lock in large losses, gaining space away from the liquidation line." Ultimately, this unfolded into a typical psychological battle: each time the price approached a critical range, it amplified the urgency of "if I don't cut now, I'll be liquidated," and once selling began, it would further increase market selling pressure, pushing themselves toward new risk edges.
Deleveraging Chain Reaction: A Giant…
● Structural Transmission of Deleveraging from a Single Institution: From Trend's large position reduction, it can be seen that when the position size of a single leveraged institution is comparable to the liquidity of the ETH market, its deleveraging behavior itself possesses the attributes of a "systemic event." Large-scale selling not only affects the price level but also transmits through indicators such as liquidation warning lines, margin utilization rates, and borrowing rates, affecting the entire market's leverage structure and triggering other funds to passively or actively follow suit in reducing leverage.
● Unfolding of Chain Liquidation Scenarios: As ETH prices rapidly decline under selling pressure, more leveraged accounts will successively hit the margin call warning line, first triggering notifications for additional margin, and when funds cannot be supplemented in time, they will enter passive position reductions or even forced liquidation processes. These passive sell orders further depress prices, forming a chain of "price decline—margin alert—passive selling—further price decline," amplifying market panic and selling sentiment in a short period.
● Real Samples of Liquidity Discount: The 255,000 ETH sold by Trend between February 1 and 6 can theoretically be measured for losses at an average price of $2168, but in actual transactions, due to limited market depth and deteriorating sentiment, their large orders may have to continuously lower prices to seek sufficient counterparties. This situation is a real manifestation of "liquidity discount": when a single sell order is too large, the actual transaction average price is often far below the expected book price, causing institutions to incur costs far exceeding the marked price during self-rescue.
● Limits of Fault Tolerance in High Volatility Phases: A core insight left by this event for the market is that during high volatility phases of ETH, the market's fault tolerance for leveraged funds is extremely low, especially when the leveraged position of a single institution is close to the available liquidity volume. Any extreme operation in either direction (whether increasing or decreasing positions) is likely to trigger unexpected price feedback. For the entire market, this is not only a risk education for Trend alone but also a warning to all strategies with high concentration and heavy positions.
Institutional Sentiment Reversal: From "Win Rate God…
● Formation and Spillover of the High Win Rate Myth: After the previous round of precise top escape, Trend was widely regarded as "high win rate institution" in the community and institutional circles. Their trajectory of buying at $1000-2000, selling near $4000, and earning about $315 million was repeatedly echoed on social media, research reports, and within the community, creating a significant spillover effect on the sentiment of retail investors and other institutions: many funds publicly or covertly followed their position direction, viewing Trend as a "smart money pointer."
● Doubts After Severe Heavy Losses: After this round of heavily leveraging to go long on ETH and encountering a paper loss of $763 million, market sentiment underwent a significant reversal. Doubts about Trend's risk control ability, position management, and trend judgment rapidly amplified, and the "win rate myth" was torn apart, with many followers who previously habitually "copied their homework" beginning to actively distance themselves. Emotionally, this shifted from "blind trust" to "vigilance and even a contrarian indicator," and this turning point has a significant impact on the entire institutional trading ecosystem.
● Emergence of Self-Correction Narratives: In public discourse, Yi Lihua's statement of "admitting that heavily going long after ETH peaked was a wrong decision" has been frequently cited. Although this statement is still unverified, it provides a narrative clue for "self-correction": even a previously high win rate institution may fall into decision-making biases after continuous successes and be forced to re-examine its risk control framework and market assumptions after significant setbacks.
● A Collective Wake-Up Call for High Leverage Strategies: The Trend event has been interpreted by many market participants as a warning sample against high-leverage one-sided gambling. Some funds have begun to actively reduce leverage multiples, increase margin redundancy, or split originally highly concentrated ETH positions into more diversified asset allocations. For other institutions, this is not just a case of "one institution's mistake," but it has triggered a re-evaluation of the sustainability of the "extreme leverage + high concentration" model in terms of risk management.
After the Blood Loss: The Era of ETH Leverage…
Trend went from securing a profit of $315 million in the last round with precise timing to suffering a massive loss of about $763 million in this round in a short period. The same strategy of "daring to place heavy bets and using high leverage" has shown completely opposite outcomes in different cycles and liquidity environments. This drastic reversal highlights a harsh reality: in high-volatility assets like ETH, even former winners can quickly transform from legends to cautionary tales if they ignore cycle changes and risk boundaries.
From a market structure perspective, this event exposed several fragile links in the ETH ecosystem: first, the asymmetry between liquidity and the size of a single institution, where large positions can easily impact prices in extreme market conditions; second, the cumulative effect of leverage ratios and liquidation mechanisms, where passive selling pressure triggered by liquidations far exceeds normal volatility during rapid price movements; third, the resonance between emotion and price fluctuations, where when "smart money" is forced to stop-loss, it often creates a magnified psychological impact on other leveraged funds.
For institutions and heavily invested players, this storm provides several clear risk management points: first, control concentration, avoiding excessive proximity between the size of positions in a single asset or direction and market liquidity; second, reserve sufficient safe margin buffers, maintaining operational space during severe price fluctuations rather than being led by the system into forced liquidations; third, when liquidity is still acceptable and sentiment has not completely collapsed, de-leverage in stages and reduce positions in batches, minimizing the dual impact on prices and one's own mindset.
Looking ahead to the subsequent game, institutions like Trend generally have two paths: either choose to lock in positions long-term while bearing paper losses, waiting for a new trend reversal in the market, betting that ETH will return to or even exceed the cost range in future cycles; or continue to reduce positions at highs during future rebound windows, steadily cutting risk exposure, using time to gradually repair their balance sheets. The choice between these two paths will not only directly affect the short- to medium-term chip structure and liquidity pattern of ETH but will also shape the next phase of the narrative around "institutional leverage and ETH" in public opinion and sentiment.
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