A bullish bet on ether has turned sour for Trend Research, a trading firm founded by Liquid Capital’s Jack Yi, resulting in a loss of $686 million. The firm’s leveraged position, built on borrowed stablecoins collateralized by ether, unraveled as the cryptocurrency’s price declined sharply this week, highlighting the inherent risks of volatility in the crypto market.
The Anatomy of a Lost Bet
Trend Research had amassed a $2 billion long position in ether, anticipating a rebound from its October 2025 dip below $4,000. The strategy involved borrowing stablecoins from decentralized finance (DeFi) giant Aave, using ether as collateral. This “looped ether” position amplified potential gains, but also dramatically increased exposure to downside risk. As ether’s price fell, the value of the collateral diminished, triggering a cascade of liquidations.
The critical moment arrived on , when ether plummeted to $1,750 – its lowest level since April 2025. Faced with mounting losses and margin calls, Trend Research began liquidating its holdings. According to data from Bubble Maps, the firm offloaded over 300,000 ether to Binance over a five-day period, totaling approximately $700 million worth of the cryptocurrency.
As of the latest reports, Trend Research now holds a mere 1.463 ether. Yi characterized the sales as a “risk-control measure,” maintaining optimism about the long-term prospects of both ether and bitcoin. He stated on X (formerly Twitter) that he expects ether to surpass $10,000 and bitcoin to exceed $200,000, framing the current situation as a temporary adjustment rather than a fundamental shift in outlook.
“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. We’re just making some adjustments to control risk, with no change in our expectations for the future mega bull market,” Yi said in a post on X.
He further emphasized the volatile nature of the crypto market, noting that such downturns are historically followed by significant rebounds, and encouraged investors to view the current dip as a buying opportunity.
A Recurring Pattern of Leveraged Losses
The Trend Research debacle is not an isolated incident. The crypto market has repeatedly demonstrated its capacity to inflict substantial losses on highly leveraged traders. The firm’s strategy – borrowing stablecoins against ether collateral – is a common practice, but one that has proven disastrous for many during periods of price decline.
The incident underscores the persistent volatility that characterizes the cryptocurrency space. Despite the growing institutional interest and increasing regulatory scrutiny, the market remains susceptible to rapid and unpredictable swings. This volatility creates opportunities for profit, but also exposes traders to significant risk, particularly those employing high levels of leverage.
Broader Market Context
The Trend Research loss occurred against a backdrop of broader market weakness. According to data from CryptoTimes.io, the total crypto market capitalization has fallen from $3.17 trillion to $2.22 trillion in just three weeks, representing a loss of nearly $1.4 trillion. This decline reflects a combination of factors, including macroeconomic uncertainty and profit-taking by investors.
The correlation between Bitcoin and the overall crypto market has also increased, reaching 0.99 in the second quarter of 2025, up from 0.97 in the previous quarter, according to a report by CoinGecko. This suggests that Bitcoin’s performance is increasingly influencing the direction of the broader market, and vice versa.
Implications for the Future
The Trend Research episode serves as a stark reminder of the risks associated with leveraged trading in the crypto market. While the potential for high returns is alluring, the possibility of substantial losses is ever-present. The incident is likely to prompt increased scrutiny of leveraged positions and risk management practices within the industry.
It also raises questions about the sustainability of certain DeFi strategies, particularly those that rely on over-collateralization and automated liquidation mechanisms. While these mechanisms are designed to mitigate risk, they are not foolproof, as demonstrated by the Trend Research case.
Looking ahead, the crypto market is likely to remain volatile. Investors should exercise caution, conduct thorough research, and carefully consider their risk tolerance before engaging in any trading activity. The allure of quick profits should not overshadow the inherent risks of this nascent and rapidly evolving asset class.
