Trend Research, led by Yi Lihua, has basically completed the liquidation of ETH today. The final figure is out: a loss of $734 million. This is not something a Twitter account made up; it was painstakingly pulled together by on-chain analyst Yu Jin from the records of Aave and Binance.
First, let's see what they actually did.
First operation: Bought 231,000 ETH at an average price of $2,667, liquidated at $4,027, making $315 million. Impressive. A textbook-level swing trade. If the story ended here, Yi Lihua would be one of the smartest whales in this cycle.
But he didn’t stop.
Second operation: Increased position by buying 651,500 ETH at an average price of $3,180. The position was directly tripled from the first time. What’s worse is the method of operation — borrowing stablecoins from Aave to buy ETH, then using the ETH as collateral to borrow more stablecoins to buy even more ETH. This is a classic cyclical leverage strategy, yielding exponential returns during rises, but experiencing exponential acceleration in losses during declines.
During the process of ETH dropping from $3,180 to $2,053, Trend Research faced multiple liquidation lines—at a low of $1,562 and a high of $1,698. When ETH briefly fell below $1,900, they had less than 8% space left before forced liquidation.
Ultimately, they chose to actively liquidate at an average price of $2,053. They returned 772,865 ETH to Binance, with an average price of $2,326. Now they only have about 21,000 ETH left, worth approximately $44 million—down from a peak of over 800,000 ETH to just 2.6%.
There is a detail that most people overlook: Trend Research as a whole may not have lost money.
According to on-chain tracking and insiders, they have made profits on other tokens like WLFI and FORM, which covered the losses in ETH. The $734 million loss in ETH is essentially 'returning all the profits previously made.' This is not a story of 'bankruptcy,' but rather a story of 'from hero to zero.'
But that is precisely the most thought-provoking aspect.
The cyclical leverage strategy has a fatal psychological trap: when the first trade is profitable, you feel that your judgment is correct; with the judgment being correct, the next trade should be increased; increasing the stake leads to more profits, further reinforcing confirmation bias. By the third or fourth trade, you are no longer trading; you are creating a belief system that you won't make mistakes.
ETH is currently priced at $2,011. If it falls below $1,910, Coinglass data shows that there are still $837 million in long positions on mainstream exchanges waiting to be liquidated. Trend Research has moved on, but the next Trend Research may be in the making.
