#CryptoMarketPullback

Ethereum's Weekly Catastrophic Scenario: Big Bet Backfires!

The sharp drop in Ethereum's price led to the unwinding of a large-scale leveraged position, creating a gap of hundreds of millions of dollars on a trading firm's balance sheet.

As cryptocurrency markets entered February with high volatility, the pullback in Ethereum (ETH) brought with it a remarkable balance sheet crisis. According to market sources, the trading firm Trend Research was forced to close a large position as the Ethereum price fell below $2,000.

The firm had been pursuing an aggressive long strategy on Ethereum in recent months. This strategy involved borrowing stablecoins through the DeFi protocol Aave to create a leveraged Ethereum-backed position. The total position size is estimated to have reached approximately $2 billion.
As the Ethereum price continued its decline, falling to $1,750 during the week, this structure became unsustainable. According to on-chain data, the company's losses were estimated at approximately $686 million.

Why did the leveraged structure collapse?

As the Ethereum price fell, the value of the assets used as collateral rapidly eroded. In contrast, since the stablecoin debt remained constant, the risk multiplier grew. This process triggered a classic leveraged position unwinding scenario.

According to data shared by on-chain analytics platforms, Trend Research transferred over 300,000 Ethereum to pay off its debts. The total value of these transfers was approximately $700 million.
The company's founder, Jack Yi, described the sales as "risk control," arguing that his long-term expectations remained unchanged. Yi suggested that Ethereum could surpass $10,000 and Bitcoin could exceed $200,000 in the medium term.

This event once again highlighted how quickly highly leveraged transactions can lead to balance sheet crises in the cryptocurrency market. Especially during downturns, there are concerns that similar structures can create chain reaction risks.
‍$ETH