Crypto whale tracking on the Hyperliquid blockchain has enabled traders to target whales with prominent leveraged positions in a “democratized” attempt to liquidate them, according to the head of 10x Research.
Hyperliquid, a blockchain network specializing in trading, allows traders to publicly observe what type of positions a whale is holding, and since these positions are leveraged, the market can assess the liquidation levels unless an additional margin is added, Markus Thielen said in a March 17 report.
Source: 10x Research
“This transparency opens the door for coordinated efforts, where groups of traders could intentionally target these stop levels to trigger liquidations,” he said.
It’s a common belief in the crypto market that whales with substantial holdings can influence the market through their trading tactics, such as stop-loss hunting, to deliberately trigger other traders’ stop-loss orders and liquidate their positions.
Thielen says the recent actions from traders show this balance of power could be shifting.
“In effect, stop-hunting is being ‘democratized,’ with ad-hoc groups now playing a role once reserved mainly for market-making desks, or treasury teams, at exchanges before tighter regulatory scrutiny,” Thielen added.
Thielen told Cointelegraph that it’s still “unclear if this type of activity will become widespread onchain, but as always, transparency can cut both ways.”
Why are traders trying to liquidate whales?
This isn’t the first time smaller traders have attempted to take down larger entities through coordinated trading tactics.
Thielen says crypto traders trying to liquidate whales have echoes of the GameStop short squeeze, which saw small traders flip the table on Wall Street short-sellers by buying GameStop’s stock, sending it to all-time highs of over $81 to liquid their positions.
“This reminds me of the dynamics we saw during the GameStop saga in 2020/2021, where aggressive short squeezes drove rapid price spikes,” he said.
Related: Bybit CEO on ‘brutal’ $4M Hyperliquid loss: Lower leverage as positions grow
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