Hyperliquid opened doors to ‘democratized’ crypto whale hunting: Analyst

Crypto Whale Tracking on Hyperliquid Blockchain Enables Traders to Target Whales with Prominent Leveraged Positions

The head of 10x Research has revealed that the transparency provided by the Hyperliquid blockchain has enabled traders to target whales with prominent leveraged positions in a "democratized" attempt to liquidate them. This development has given rise to a new trend, where groups of traders are working together to target specific stop levels and trigger liquidations.

How Does it Work?

Hyperliquid, a blockchain network specializing in trading, allows traders to publicly observe the positions held by whales. Since these positions are leveraged, the market can assess the liquidation levels unless an additional margin is added. This transparency opens the door for coordinated efforts, where groups of traders could intentionally target these stop levels to trigger liquidations.

The Game is Afoot

The recent actions from traders have shown that this balance of power could be shifting. According to the 10x Research report, the dynamics we saw during the GameStop saga in 2020/2021, where aggressive short squeezes drove rapid price spikes, are being replicated in the crypto space. When stop levels get triggered, prices often accelerate in that direction, providing liquidity for others to cover.

The 40x Leverage Short-Seller

On March 16, a crypto whale known for placing large, highly leveraged positions on Hyperliquid opened a 40x leveraged short position at $84,043 for over 4,442 Bitcoin (BTC), worth over $368 million. The move did not go unnoticed, and pseudonymous trader CBB sent out a call to gather a team of traders with enough funds to liquidate the whale’s position.

The Hunt is On

Thielen said in the 10x report that on March 16, Bitcoin surged by 2.5% within minutes, partly because of a coordinated effort to liquidate a whale’s short position on Bitcoin perpetual via Hyperliquid. The whale has since increased their position to $524 million, and at one point, the whale hunters nearly got their wish when the price of Bitcoin hit $84,583.84.

Is it a Last-Ditch Effort?

However, some speculate that the exposed short position could be intentional. Hedge fund trader Josh Man said in a March 17 post that the whale might be purposefully trying to get liquidated. "So this there is a fairly rare and not widely used technique of self-liquidation and this FEELS a little like that," he said. "In such events, the seller is actually creating a bomb designed to go off and create a rally from the liquidation of his own short. One would expect that he has a large offsetting long versus short."

Conclusion

The recent developments in the crypto space have shown that the balance of power is shifting. The democratization of stop-hunting has given rise to a new trend, where groups of traders are working together to target specific stop levels and trigger liquidations. This new landscape has the potential to change the way whales operate in the market, and it will be interesting to see how this plays out in the coming months.

FAQs

Q: What is Hyperliquid?
A: Hyperliquid is a blockchain network specializing in trading that allows traders to publicly observe the positions held by whales.

Q: What is stop-hunting?
A: Stop-hunting is a trading strategy where traders intentionally target specific stop levels to trigger liquidations.

Q: What is the GameStop saga?
A: The GameStop saga refers to the events surrounding the short squeeze on GameStop’s stock in 2020/2021, where small traders flipped the table on Wall Street short-sellers by buying the stock, sending it to all-time highs.

Q: What is the 40x leverage short-seller?
A: The 40x leverage short-seller is a crypto whale who opened a 40x leveraged short position on Hyperliquid, worth over $368 million. The move was noticed by traders, who attempted to liquidate the whale’s position.