Forward the Original Title‘From Livermore to Crypto Whales: A secret trade war spanning a century, decoding the offensive and defensive game behind Hyperliquid’s $300 million order’

This time, the king of the market also operated on a large scale and succeeded. He also took the initiative to liquidate his positions when the market liquidity was insufficient, and was pulling off an extreme maneuver that left the market in awe.

“In all my years as a stock operator, this day stands out most vividly in my memory. It was on this day that my profits first surpassed $1 million. It marked the first time I had successfully concluded a trade according to a predetermined strategy. Everything I had foreseen had become reality. Yet, above all else, what stood out the most was this: my passionate dream had come true.

On this day, I was the king of the market!”

——“Reminiscences of a Stock Operator”

Over a century ago, legendary stock trader Jesse Livermore used these words to describe his triumph. A hundred years later, a similar scene appears to have unfolded in the cryptocurrency market. Coincidentally, this time’s market king also achieved success through large-scale trading and intentionally triggered a forced liquidation in a low-liquidity market, once again showcasing a daring maneuver that commanded the market’s admiration. The key difference, however, is that this time, the exchange paid for the king’s profits.

The Century’s Cycle: The On-Chain Rebirth of the Wall Street Ghost

This whale, who once famously turned a $6 million investment into a $6.8 million profit by going long on ETH and BTC with 50x leverage just before Trump announced plans to include BTC, ETH, SOL, ADA, and XRP in his crypto asset strategic reserve, has once again captured the market’s attention. Over the past month, this trader repeatedly leveraged market fluctuations to secure substantial profits and went on to stage a textbook battle destined to be recorded in Hyperliquid’s history.

On March 12, the giant whale once again opened a long position of 160,000 ETH with 50x leverage. After withdrawing $8 million in funds, they deliberately triggered a forced liquidation, ultimately netting around $1.8 million in profit — though this maneuver cost the Hyperliquid exchange $4 million in losses.

While this scenario may seem somewhat illogical at first glance, the profit was essentially achieved by exploiting a “loophole” in Hyperliquid’s on-chain trading mechanics.

Let’s break down the whale’s trading process:

March 12, 6:54 AM: The whale deposited $3.48 million into Hyperliquid via a cross-chain bridge and opened a position of 17,000 ETH (valued at $31.2 million).

Subsequently, by adding margin and expanding the position, the whale increased his total holdings to 21,790 ETH (valued at $40.85 million).

The whale continued to scale up, eventually building a position totaling 170,000 ETH (valued at $343 million), with an unrealized profit of $8.59 million.

Throughout this process, the address used a total margin of $15.21 million.

Ultimately, by closing the position and withdrawing margin funds, they reclaimed $17.08 million in total — earning a net profit of $1.87 million.

In the final move, the trader withdrew $8 million in funds, leaving approximately $6.13 million as margin to await forced liquidation.

The Hunt Begins: The Calculated Strategy Behind the 170,000 ETH Position

Why did the whale choose this strategy instead of simply closing the position to lock in profits?

During this process, the giant whale had two options. One was to close the position directly, with a book profit of US$8.59 million. While this method maximizes gains on paper, the size of the $343 million order was so massive that counterparties on-chain may not have been able to absorb it all at once. In such a scenario, the whale would have had to wait for the price to decline significantly before their entire order could be filled, reducing overall profits. Additionally, actively closing such a large position could have caused substantial market impact, sharply driving down prices and shrinking the profit margin.

Therefore, the giant whale chose the second option, which was to withdraw part of their margin and some profits (by partially closing their position and then pulling out the excess margin), ensuring the remaining margin stayed at the minimum level required for 50x leverage. In this way, if the market continues to rise, he will be able to obtain greater profits and can choose to continue closing positions in batches. If the market drops rapidly, he will liquidate his position at a drop of 2%. But because he has withdrawn US$17.08 million in funds, the overall profit has been achieved at US$1.87 million. Therefore, even if the position is liquidated, it will not result in actual losses.

What initially appeared to be a reckless gambler’s move ultimately proved to be a calculated, conservative profit-taking strategy.

According to data released by Hyperliquid, the exchange reported a $4 million loss that day (part of which came from copy-trading participants). Meanwhile, the whale achieved over $1.8 million in profit.

In terms of risk-to-reward ratio, the whale’s total investment amounted to approximately $15.21 million, resulting in a $1.87 million profit — a return of roughly 12.2%. While this percentage gain and dollar profit are notable, they pale in comparison to the whale’s earlier success during the surge following Trump’s announcement of ADA and SOL’s inclusion in the strategic reserve.

Aftershocks and Insights: Driving the Evolution of On-Chain Exchanges

From a market perspective, the outcome of this event — where the exchange itself ended up absorbing the losses — is extremely rare. However, this scenario appears to have been possible only on Hyperliquid.

According to KOL Hanba Longwang’s (@dotyyds1234) tweet, a similar event occurred in 2018 involving the OK Exchange. In that case, a trader employed the same strategy: securing profits, withdrawing margin, and ultimately forcing the exchange to absorb the losses when the liquidation price was hit, as there were no counterparties available to fill the order.

Following the OK Exchange incident, centralized exchanges implemented a tiered margin system to ensure users’ margin levels always remained within reasonable market limits. This recent event seems to have delivered a valuable lesson for the emerging on-chain exchange Hyperliquid. Since Hyperliquid operates entirely using DEX (decentralized exchange) mechanisms, it lacked risk control measures for margin requirements.

As a result, when the whale’s position was liquidated, the market lacked sufficient liquidity to absorb the forced liquidation order, leaving Hyperliquid to step in as the counterparty — footing the bill itself. Data from HLP reveals that the $4 million loss incurred in this event was roughly equivalent to Hyperliquid’s entire monthly profit. As of March 10, Hyperliquid’s HLP earnings had accumulated to $63.5 million, meaning that despite this significant loss, the exchange retained nearly $60 million in remaining profit.

However, given the heated discussions sparked on social media, there are concerns that other users may attempt to replicate the whale’s strategy. In response, Hyperliquid promptly announced that it would reduce the maximum leverage for BTC to 40x and for ETH to 25x to prevent similar incidents.

As for speculation regarding whether this exploit could pose a fundamental threat to Hyperliquid’s stability, the numbers suggest otherwise. Currently, Hyperliquid’s HLP pool holds nearly $60 million in reserves. With BTC’s new 40x leverage cap, this fund could theoretically withstand up to $2.4 billion in forced liquidation risk. From this perspective, very few traders possess the resources to challenge that limit. For typical market orders, however, sufficient counterparty demand would generally be enough to mitigate potential risks without requiring Hyperliquid to step in directly.

Looking back at the entire incident, it’s evident that this whale may have conducted multiple tests before executing this strategy. Zhu Su, co-founder of Three Arrows Capital, speculated that the reason this address was willing to take on such high risk was that they were simultaneously shorting on Binance. This effectively created a long-short hedge position. It was only after discovering that Hyperliquid’s liquidation mechanism differed from that of centralized exchanges that the whale decided to exploit this opportunity.

In reality, this trading technique isn’t some groundbreaking innovation. As mentioned earlier, over a century ago, Jesse Livermore unintentionally achieved a similar outcome. The key difference, however, was that Livermore went long to support the market and actively closed his position to stabilize it. In today’s market, exchanges have become the safety net for such situations, which has enabled users to profit at the exchange’s expense. However, this loophole appears to have closed for good, and it’s unlikely that a similar opportunity will arise on any platform in the foreseeable future.

For the exchange, this was yet another costly lesson. For retail traders, this strategy was merely a fleeting occurrence — a one-off exploit that isn’t replicable or practical as a consistent trading method. Ultimately, it’s just an entertaining story that captured attention during an otherwise uneventful market phase.

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