On-chain Gold's Biggest Short Squeeze: "On-chain Stock Trader" Gold Bear Turned Loss into Gain, Monthly Profit Reached $15.4 Million

The whale's move was a classic high-leverage bet that turned sharply profitable. He deployed $2.8 million to control a $30.3 million PAXG short position, using 5x leverage. This amplified his exposure and the potential payoff from a price move.

The squeeze played out as spot gold prices rebounded strongly. The address's PAXG shorts, which had been underwater, saw their unrealized losses shrink as the metal climbed toward the $4,850-$4,890 range in early February. This price action was key to converting a potential loss into a gain.

The profit flow was massive. The whale realized $12.7 million in on-chain trading signals this month, with the PAXG squeeze being a major component. This profit surge, combined with gains from other positions, highlights the extreme returns possible from concentrated, leveraged plays on commodity price swings.

Market Structure

The infrastructure for on-chain gold is maturing rapidly, with institutional liquidity now flowing in. Crypto market maker Wintermute has launched an over-the-counter desk for the two largest gold-backed tokens, PAXG and XAUT. This move provides a direct channel for large players to trade these assets, signaling a shift from retail-focused platforms to professional-grade execution.

Volume is already massive and growing. In the fourth quarter of 2025, tokenized gold trading hit $126 billion, surpassing the combined volume of five major gold ETFs. This 24/7 liquidity is a key driver, with market cap for on-chain gold surging over 80% in just three months to $5.4 billion as investors favor instant settlement.

The broader tokenized asset market is expanding too. Tokenized public-market real-world assets, including gold, tripled in 2025 to roughly $16.7 billion. Industry projections suggest this could expand 2.8x to $15 billion in 2026, even as other crypto markets remain subdued. This growth points to a structural shift, with gold leading the charge in bringing traditional commodities onto blockchain rails.

Counter-Flow Dynamics

While one whale squeezed shorts, another positioned for the rally. The address known as "Hyperliquid Early Contributor Loracle" established a massive long position, buying 6 days ago at an average price of $5,047. This $46.5 million PAXG bet was initially underwater but turned profitable as spot gold climbed, mirroring the rebound that squeezed the shorts.

The primary catalyst was clear risk-off sentiment. Gold's 1.6-2.3% rebound on equity selloffs provided the price move needed for both whales' positions to flip. This flight to safety, triggered by a weak labor report and a volatile crypto market, created the exact conditions that turned a potential loss into a gain for the long whale.

The setup reveals a market in motion. While the short squeeze amplified losses for leveraged bears, the simultaneous rise of a major long whale shows institutional capital actively taking the other side. This counter-flow dynamic, driven by macro catalysts, is a key feature of the maturing on-chain gold market.