Cryptocurrency traders shorted Ethereum and lost $24 million...

How to lose US$24 million in Ethereum in 12 seconds?

A cryptocurrency trader who has long been known for shorting profits was forced to close the position in just 12 seconds during a sharp rebound in the market, resulting in a loss of nearly US$24 million. The trader, whose chain ID is "pension-usdt.eth", had previously held the short position for 1445 hours (just over two months). Hyperliquid platform data shows that the liquidation began at 04:51:03 on Thursday and ended at 04:51:15, with nearly 50,000 Ethereum items cleared in multiple stages. The first batch of 9989 Ethereum items were closed at approximately US$2193; then 20,698 Ethereum items were cleared at approximately US$2209; then 15,830 Ethereum items were closed at US$2214;1871 Ethereum items were closed at approximately US$2236; the remaining 1417 Ethereum items could not be fully settled through the order book and were processed through Hyperliquid's backup clearing mechanism. In those 12 seconds, Ethereum gained about $43. Since the trader holds a short position, closing the position requires buying back Ethereum. Each forced buy consumes available seller liquidity, making it increasingly costly to close remaining positions. Eventually, a classic clearing feedback loop was formed: a price rise triggered a forced buy, which pushed up the price further, and then the next part of the short position was cleared at a worse price.

Why is this loss so abnormal?

Pension-usdt.eth has previously established a good public trading record. The address has accumulated approximately US$49 million in profits from shorting Bitcoin and Ethereum, including a profit of nearly US$6 million on 60,000 short Ethereum positions closed in June and a profit of approximately US$3.6 million on 1400 short Bitcoin positions. Earlier in June, the trader won more than 20 transactions in a row while expanding the nominal value of the Ethereum short position to about $100 million. Thursday's liquidation wiped out about half of the profits from that winning streak. The trader's Hyperliquid account was almost emptied, with the platform rankings showing a balance of only US$35.61, and a yield of-100% over the past 30 days. This data only applies to the transaction account and does not mean that the associated blockchain address holds assets elsewhere. This incident shows that when leveraged trading is involved, a good historical record provides extremely limited protection. Traders can repeatedly make the right direction judgment, but as long as a market fluctuation hits the liquidation threshold, most or all of their leveraged positions may be lost.

Investors enlighten

Leverage changes the importance of timing. Spot investors can usually withstand a period of unfavorable fluctuations, but leveraged traders may be forced to leave the market before long-term judgments are verified.

What triggered the short squeeze in cryptocurrency?

The liquidation came after a sudden reversal in the digital asset market. For most of the time, Bitcoin prices were below $65,000, and the short selling strategy was very profitable. However, market sentiment shifted after the U.S. Treasury Department announced plans to expand purchases of medium-and long-term treasury securities in its bond repurchase program. The Treasury's actions depressed long-term yields and weakened the dollar, while risky assets rose. The plan was designed to improve liquidity in the treasury bond market rather than as a quantitative easing exercise, but cryptocurrency traders quickly responded to expectations of easing financial conditions. Bitcoin climbed from about $64,000 to around $70,000, while Ethereum rose about 18% to exceed $2200 in 24 hours. The rally hit derivatives markets that hold large short exposure. Within 24 hours, approximately $2.74 billion in short cryptocurrency positions were cleared, the largest wave of forced short liquidations in available data since 2021. Short positions in Ethereum accounted for more than $1 billion of this. Pension-usdt.eth is not the single biggest loser. Another Hyperliquid trader lost approximately $48.8 million in Bitcoin positions in the same rally.

Can forced liquidation push the rebound to continue?

The scale of the short squeeze explains why cryptocurrency prices are rising so quickly. Not every purchase in this rally represents a voluntary entry by new investors. Some of the buying came from exchanges automatically liquidating short positions as prices broke through clearing levels. This mechanical demand could accelerate the rebound, as each price increase puts another batch of leveraged shorts at risk. Large positions may also cause prices to become higher and higher due to forced purchases consuming liquidity during execution. However, liquidation-driven buying is temporary. Once fragile short positions are cleared, this source of demand disappears. Subsequent gains will depend more on new spot purchases and whether investors will continue to increase exposure after the squeeze ends. For pension-usdt.eth, this distinction is crucial. Cryptocurrency prices may fall again, and the trader's broader bearish view may ultimately be vindicated, but the liquidated positions no longer benefit from it. A trade that has been held for more than two months ends with only 12 seconds of unfavorable price fluctuations.