Trader Loses $10M in ETH, BTC Liquidations After $4.79M Gains

An anonymous trader, identified by the handle “qwatio” on the social media platform X, has recently garnered significant attention due to a series of substantial losses. The trader experienced a partial liquidation of 8,000 ETH ($20.11M) and 280 BTC ($30.4M) within a week, according to the on-chain analytics firm Lookonchain.

The trader's journey on the platform Hyperliquid has sparked discussions about potential insider trading, as noted by the analytics firm earlier this March. The trader's long positions in BTC and ETH, leveraged at 50x, resulted in a profit of around $6.8M in a single day, just before a significant executive order was signed. The firm's investigation revealed that the trader continued to take high-risk, 50x leveraged positions in ETH, which, after accounting for profits, led to the liquidation of over 160,000 ETH. This burden was absorbed by the liquidity provider, HLP, prompting Hyperliquid to cap the maximum leverage for ETH at x25 to prevent similar incidents in the future.

Despite the setbacks, the trader continued to engage in risky bets, going short on Bitcoin. A group of individuals attempted to liquidate his positions, but the trader responded swiftly by adding $5M to support the trade. As prices fell further, the trader realized a profit of $4.4M. Lookonchain summarized that the trader made over $10M in each of two separate wallets and another with over $9M in profits. After covering prior losses, the total winnings amounted to $4.79M.

However, the trader's luck did not hold. In the last few days, the trader's new wallet faced six liquidations, resulting in a total loss of approximately $10 million. This series of events highlights the volatile nature of high-leverage trading and the significant risks involved.

The trader's story bears a striking resemblance to that of James Wynn, another high-stakes trader who has been under the radar of Lookonchain. Wynn is known for his even higher-leverage plays, including a $1.25 billion long BTC position with 40x leverage, which at one point resulted in over $87 million in unrealized profits. However, Wynn's trading spree also ended in substantial losses, with his unrealized PNL reaching almost nine figures before roundtripping it all. The analytics firm noted that it took Wynn 70 days to go from 0 to $87M+ in profit, and only 5 days to lose almost all the $87M+ in profit.

These incidents underscore the extreme volatility and risk associated with high-leverage trading. The trader's experience serves as a cautionary tale for those engaging in similar activities, highlighting the potential for significant losses despite initial successes. The analytics firm's observations provide valuable insights into the dynamics of high-risk trading and the importance of risk management in such endeavors.