Leveraged Ether Bet Implodes as Trend Research Suffers $686 Million Hit After ETH Slides Below $2,000

A dramatic selloff in ether this week turned an aggressively bullish wager into a costly unraveling for Trend Research, a trading firm led by Liquid Capital founder Jack Yi, after ETH prices plunged below the $2,000 mark.

Trend Research had spent months constructing a massive long position in ether valued at roughly $2 billion. The strategy relied on a high-risk “looped” structure: the firm deposited ether as collateral on the DeFi lending protocol Aave, borrowed stablecoins against that collateral, and then used the borrowed funds to buy more ETH, repeating the process to amplify exposure.

The firm’s conviction was rooted in ether’s long-term outlook. Trend Research expected a swift recovery after ETH slipped below $4,000 in October. Instead, the market moved sharply in the opposite direction. Ether continued to decline, steadily weakening the collateral base supporting the firm’s fixed stablecoin debt — a textbook example of how leverage magnifies losses during downturns.

The situation deteriorated rapidly this month as ether fell in tandem with bitcoin, which was trading around BTC$70,763.38. On Feb. 4, ETH dropped as low as $1,750, its weakest level since April 2025. At that point, Trend Research’s position began to collapse.

Blockchain data suggests the firm moved quickly to stem further damage. According to Arkham, the unwinding of the position resulted in an estimated loss of $686 million. Data from Bubble Maps showed that Trend Research liquidated a massive amount of ether to cover its obligations.

“Trend Research started sending large amounts of ETH to Binance to repay debt on AAVE,” Bubble Maps said in a post on X. “In total, this cluster moved 332k ETH worth $700M to Binance over 5 days.” After the selloff, the firm’s on-chain holdings reportedly dwindled to just 1.463 ETH.

Despite the scale of the losses, Yi framed the actions as a necessary defensive step rather than a capitulation on his broader market thesis. He described the sales as part of a risk-management effort amid extreme volatility.

“As multi-heads in this round, we remain optimistic about the performance of the new bull market: ETH reaching over $10,000, BTC exceeding $200,000 USD,” Yi wrote on X. “We’re just making some adjustments to control risk, with no change in our expectations for the future mega bull market.”

Yi doubled down on his bullish outlook, arguing that sharp price swings are a defining characteristic of crypto markets and often precede powerful rebounds. He suggested that the current environment presents an opportunity rather than a warning sign.

He added that now is the best time to buy tokens, calling volatility “the biggest feature of the crypto circle.” “Historically, countless bulls have been shaken off by this volatility,” Yi said, “but often what follows is a doubled rebound.”

The episode highlights a familiar reality in crypto trading: even well-capitalized firms can see fortunes reverse in a matter of days when leverage collides with sudden market moves. It also underscores how popular leveraged loop strategies — borrowing stablecoins against ETH collateral to chase upside — continue to resurface each cycle, despite repeatedly blowing up during sharp downturns.

By fLEXI tEAM