Key Points
- A Bitcoin whale has allegedly set up a $520 million short 40x leverage position on Hyperliquid.
- This move has sparked speculation about a potential market manipulation strategy known as “self-liquidation”.
A Bitcoin whale is speculated to have initiated a gigantic $520 million short position on Hyperliquid, using 40x leverage. This is one of the most substantial trades ever recorded on this decentralized exchange.
The trade would be obliterated if Bitcoin’s price increased by just 1.75% from the position’s entry at $83,898, with a liquidation price of $85,561. This situation attracted traders who saw a chance to force a liquidation.
Market Reaction and Speculation
A trader, Cbb0fe, rallied a group on an unnamed platform to push Bitcoin’s price up and trigger the liquidation. The price rose by 2.5% within minutes on the same day, nearly reaching the whale’s threshold before they added more funds to increase their liquidation price.
According to a report by 10x Research, analyst Markus Thielen noted this event as part of an emerging trend of democratization of stop-loss hunting. This trend sees independent traders, not just institutions, coordinating to influence the market, facilitated by the transparency of leverage trading on decentralized exchanges.
Some analysts believe the whale’s massive position might be a strategic move rather than a reckless short gone awry. Cryptocurrency analyst Josh Man suggests the whale might be intentionally risking their position to liquidation to instigate a price rally, a seldom-used tactic known as “self-liquidation.”
Implications and Market Watch
If the whale has a larger long position elsewhere, their own short liquidation could push Bitcoin’s price up, benefiting their long position significantly.
Hyperliquid has previously witnessed such high-stakes gambles. Just last week, a trader placed a $285 million leveraged Ethereum bet that resulted in a $4 million loss for the platform. Consequently, Hyperliquid reduced leverage limits for Bitcoin and Ethereum.
The cryptocurrency community is now closely observing Bitcoin’s price movement. If the whale’s short position is liquidated, it could further fuel an upward momentum. Regardless, independent traders and the whale are currently entangled in a precarious high-stakes competition in this trade.
