Ethereum Long War: What the "Same Old" Whale Strategies Really Mean

As the years go by, the landscape of the market may seem similar, but what it truly signifies can be vastly different. In early 2026, the battle involving $70 billion of large investors on Ethereum vividly illustrates this lesson. Both Tom Lee’s BitMine and E. Lee Hwa’s Trend Research, while both taking long positions on ETH, were walking entirely different risk paths.

What should have been a quiet progression turned into a spectacle exposed to the entire network due to on-chain transparency. Like the cases of Three Arrows Capital and FTX before, an overconfidence in certainty can lead the market to underestimate its short-term brutality, resulting in dramatic outcomes.

BitMine and Trend Research: Different Meanings Behind Long Strategies

BitMine, which has gained attention as a major ETH holder, completed a $250 million funding round in July 2025, and in less than half a year, transformed from a mining company into one of the world’s largest ETH holders. According to Ultra Sound Money data, the company currently holds 4,285,125 ETH (roughly $10 billion market value), accounting for about 3.52% of Ethereum’s circulating supply.

The core of their strategy is “low leverage, high staking, zero debt”—a physical asset-oriented approach. They have staked about 70% of their ETH (2,897,459 ETH) and hold $586 million in cash reserves. When ETH was bought at around $2,600 during a dip, adding 41,787 ETH at an average cost of approximately $3,837, their current average cost basis is about $3,837 per ETH. At the current ETH price of $1.97K, this results in an unrealized loss of about $6.4 billion. However, the key point is that they continue to generate over $1 million in cash flow daily.

In contrast, the strategy chosen by Trend Research has a completely different meaning. Since November 2025, the firm has been openly long on ETH on-chain, employing a cyclical leverage mechanism: staking ETH on Aave, borrowing USDT, using the borrowed USDT to buy more ETH, and repeating this cycle—“staking borrow → buy → re-staking borrow.”

This operation is highly effective in a bullish market but faces threats during downturns, such as margin calls and forced liquidations due to collateral value declines. When ETH plummeted from nearly $3,000 to about $2,150 in just five days, the implications became clear.

The Reality of “Stop-Loss Survival” Exposed to the Market

As of February 2, Trend Research had to transfer and sell 73,588 ETH (about $169 million) on Binance multiple times to repay borrowed funds. To avoid forced liquidation, the firm repeatedly engaged in what can be called “stop-loss survival” on-chain.

According to Arkham’s chain data, each time Trend Research sold one ETH, it was simultaneously securing its survival space and unconsciously adding new sell pressure to the market. The total unrealized loss on their current borrowing position has reached $613 million, with realized losses of $47.42 million and unrealized losses of $565 million. Still, approximately $897 million in leveraged debt remains outstanding.

The crucial point is that this entire process was observable in real-time by the entire network. Unlike traditional finance, where information asymmetry exists, on-chain data reveals all whale transfers, collateral movements, and liquidation lines 24/7.

The “Ice and Fire” Dual Realms of On-Chain and Off-Chain

Strangely, despite billions of dollars in losses among whales, the on-chain mechanisms are burning with a different kind of heat. According to The Block, over 36.6 million ETH (more than 30% of the circulating supply) are staked on the Ethereum Beacon Chain, reaching a new high surpassing the previous peak of 29.54% in July 2025.

This shift is profound. The large-scale staking of ETH indicates that these assets have voluntarily exited the free float market. In other words, the network is transitioning from a speculative “trading currency” to a “means of production” that participates in network operation and generates ongoing revenue. Major holders like BitMine are leading this trend, with over 4.08 million ETH waiting in the entrance queue amid tightening liquidity.

Data from the Ethereum Validator Queue shows that this waiting scale began to surge sharply in December 2025. Interestingly, this coincides with the period when Trend Research explicitly started going long on ETH.

The Significance of Transparency: Explicit Position Risks

From a game theory perspective, publicly revealing positions, costs, leverage ratios, and liquidation lines on-chain is akin to placing oneself on the sniper list of all market resonances. BitMine, with its “low leverage, zero debt” structure, chooses to lie dormant within a time window, patiently waiting for daily staking yields to gradually hedge its unrealized losses.

Meanwhile, Trend Research faces a negative cycle: “decline → approaching liquidation line → selling ETH → adding collateral → decline again.” Underestimating the market’s short-term irrationality can be extremely costly.

E. Lee Hwa himself issued a reflective comment on February 2. Drawing from his experience of openly long ETH when it dropped to $1,450 in April 2025 and profiting from the rebound, he likely judged the current situation to be similar. However, the same strategy’s implications vary greatly depending on the time horizon.

The Market Mechanism as a “Grand Cleanup”

From Three Arrows Capital to FTX and now BitMine, the script of the market remains unchanged. Every collapse begins with an overconfidence in long-term certainty. But from another perspective, this is also an inevitable “grand cleanup” that Ethereum must undergo.

Each cycle involves whale descent processes: whales are observed, leverage is eliminated, path dependence is shattered, and chips are redistributed. Those who need to cut losses do so, and those who can endure do so, creating an environment where only the truly light-armed can fight effectively.

Currently, the Ethereum ecosystem is in a state of “double heavens of ice and fire”—a robust on-chain staking structure paired with tightening off-chain market liquidity. The significance of this seemingly repetitive battle symbolizes a profound transformation process of network efficiency and participant淘汰.