1. Incident Timeline: From 'Hard Stance' to 'Cutting Losses'
In early February 2026, the cryptocurrency market faced a deep freeze. Ethereum (ETH) plummeted from its high, breaking through the psychological barrier of countless individuals. Yi Lihua, who had once publicly expressed bullish sentiments and heavily invested through his Trend Research fund, became the focal point of attention across the entire network.
High-Stakes Betting on ETH: Yi Lihua engaged in cyclical lending through DeFi protocols (such as Aave), mortgaging ETH to borrow stablecoins and then buying back ETH. This strategy yields enormous profits in a bull market but is suicidal in a bear market.
On the Edge of Liquidation: As the price of ETH fell below the $2000 mark, Yi Lihua's liquidation price was closely monitored by the entire network. To avoid forced liquidation by the platform, he had no choice but to enter a prolonged 'stop-loss mode.'
Brutal exit: According to on-chain data, Yi Lihua sold about 650,000 ETH in just over a week. The cumulative loss exceeded $680 million (approximately 5 billion RMB).
As he admitted on social media: 'Entered the market too early, underestimated the cruelty of the cycle.'
II. In-depth analysis: Why do top players also fail?
Many small traders don't understand why big players with over a billion in assets and research teams still incur such severe losses?
The 'backlash' of leverage: Yi Lihua's core mistake lies in the path dependence under high leverage. He started in 2015 by mining and heavily investing in ETH, and this success led him to develop an almost religious obsession with ETH. However, recursive lending amplified the volatility, and once the drop exceeds the margin coverage, the account will instantly go to zero.
Single asset concentration: 'Don't put all your eggs in one basket' is a common saying, but big players often seek excess returns and choose to fully stake ETH. When market liquidity tightens and ETH's drop far exceeds BTC's, this strategy collapses directly.
Counterparty competition: On-chain data is transparent. When all short sellers in the market know your liquidation price is $1600, they will work together to drive the price down, which is the cruel 'hunting' in the crypto world.
III. 'Survival Guide' for Binance Square small traders
If you don't want to be the next 'cut little white', please keep these three pieces of advice:
1. Never touch 'recursive lending' that you don't understand
Many small traders see high DeFi yields and imitate big players to do collateralized lending. Remember: If you can't calculate how much the price would drop before you go bankrupt, then don't touch leverage. For ordinary people, spot trading is the best risk management tool.
2. Belief cannot be eaten as food
Yi Lihua has faith in ETH, but he lost due to timing. In the crypto world, one must learn to respect trends. When the big trend weakens and macro liquidity dries up (like the Fed not injecting liquidity or a flash crash in the US stock market), no token can escape disaster.
3. Position management: Leave some bullets, leave some retreat
The reason why big players can cut losses is that they still have 'meat' to cut. Ordinary small traders, once fully invested and trapped, often end up losing everything.
Operational Advice:
Single currency positions should not exceed 30% of total assets.
No matter how optimistic you are about the future market, always keep 20%-30% of stablecoins (USDT/FDUSD) in your account as 'lifesaving money' or bottom-fishing ammunition during a crash.
Written at the end
Yi Lihua's exit is a footnote of an era and proves again that the market has no eternal gods. In this unpredictable year of 2026, survival is more important than doubling your investment.
