Trend Research has recently offloaded over 612,000 ETH, valued at approximately $1.26 billion, within a span of six days. This significant sale occurred as the firm faced increasing liquidation pressure, triggered by a downturn in Ethereum”s price.
The firm, led by Jack Yi, has seen its holdings diminish to just 39,301 ETH, worth around $80.93 million. The decision to sell was driven by a need to manage a highly leveraged position that had reached a staggering $958 million borrowed in stablecoins through the Aave lending protocol.
As Ethereum”s value declined, the collateral backing this leveraged position became less secure, which ultimately led to forced liquidations. On February 4, the firm transferred an additional 10,000 ETH to Binance for liquidation, worth approximately $21.2 million. In just the past day, Trend Research moved 423,864 ETH, valued at about $830.63 million, to repay debts.
Initially, the deleveraging began with the sale of 33,589 ETH for roughly $79 million, using $77.5 million in USDT to settle outstanding obligations. These actions lowered the liquidation threshold from $1,880 to $1,830, but continued price declines necessitated further sales.
Market analyst MartyParty pointed out that the sharp drop to $1,800 was likely aimed at triggering Trend”s liquidation point, prompting forced selling that drastically reduced their position.
Currently, Ethereum”s technical outlook presents mixed signals. Analysts note that ETH is trading near the $2,120 resistance level, with potential for upward momentum if it breaks through this barrier. Recent trading data shows ETH at $2,072.57 with over $52.9 billion in 24-hour volume, reflecting an 8.22% increase in just one day, although it remains down by 23.07% over the last week.
Veteran analyst Tom Lee has commented on the prevailing market sentiment, suggesting that it has reached an extreme low. He draws parallels to the aftermath of the FTX collapse in November 2022, noting that historical patterns show Ethereum has often rebounded sharply following significant drawdowns, hinting at the possibility of a rapid recovery.
The situation surrounding Trend Research serves as a cautionary tale regarding the risks associated with aggressive leverage in volatile markets. Forced sell-offs can exacerbate downward trends, and while historical recovery patterns may suggest hope, the current environment remains precarious.
