Hunting Ethereum Bulls: "Whales" Suffer $7 Billion Loss and Are Being Watched Collectively

Written by: Frank, MaiTong MSX

Tom Lee and Jack Yi probably haven't been able to sleep well these days.

After all, if we were to choose the most dramatic protagonist for the cryptocurrency market in early 2026, it would likely not be Bitcoin or some emerging narrative, but rather these two ETH "whales" who are publicly being roasted over an open fire.

Those who enjoy the spectacle never complain about the size of the funeral.

In recent days, global investors have been holding their breath, collectively watching the largest and most transparent batch of bullish positions in Ethereum's history struggle to survive amidst unrealized losses.

1. ETH "Whales" Have Accumulated Over $10 Billion in Unrealized Losses

Year after year, the situation remains similar, but the "whales" change.

In the context of Web3, the term "whale" typically refers to institutions or individuals with substantial capital that can influence market direction.

However, in recent years, the positive connotation of this term has been continuously diluted by reality, morphing into something that is no longer just heavyweight entities, but rather the most conspicuous and easily observed targets during market volatility.

In the past few days, the two most discussed ETH "whales" in the market have been BitMine (BMNR.M), led by Tom Lee, and Trend Research, headed by Jack Yi. Although both are bullish on Ethereum (ETH), they represent two entirely different paths: the former is the Ethereum treasury company with the largest ETH holdings, while the latter is an investment institution that publicly leverages and goes long on ETH on-chain.

Let's first look at BitMine.

As one of the most representative Ethereum treasury companies, BitMine once boldly proposed a long-term goal of acquiring about 5% of Ethereum's total supply. As of the time of writing, the company has accumulated 4,285,125 ETH, with a market value close to $10 billion.

According to ultra sound money statistics, the current total supply of Ethereum is approximately 121.4 million ETH, meaning BitMine has directly locked in about 3.52% of ETH's circulating supply, making this vision quite aggressive.

It's worth noting that it officially launched its "Ethereum treasury" transformation only after completing a $250 million private placement in July 2025, meaning in less than six months, BitMine has transitioned from a Bitcoin mining company to the largest holder of ETH globally.

Source: ultra sound money

What’s even more noteworthy is that even when ETH fell below $3,000 last week, and the market was in a rapid collapse, BitMine chose to go against the trend and continued to buy, purchasing 41,787 ETH (approximately $108 million) at around $2,601, demonstrating strong conviction in its holdings.

But problems soon followed—costs. Beliefs come with a price, and BitMine's average holding cost for ETH is about $3,837, which means that when ETH fell to around $2,350, its unrealized losses had expanded to about $6.4 billion.

This extremely aggressive "coin-based" transformation has also played out in a wildly chaotic valuation game in the U.S. secondary market.

Looking back to July 2025, when BitMine first began disclosing its Ethereum purchasing strategy, its stock price (BMNR.M) hovered around $4. Subsequently, the stock price completed a leap from the floor to the sky within six months, peaking at $161, becoming the most dazzling "Ethereum shadow stock" in the global capital market.

However, success and failure both hinge on Ethereum. As ETH prices sharply retreated, the premium bubble in BitMine's stock price quickly burst, and it has now plummeted to $22.8.

If BitMine represents a long-term spot path that exchanges time for space, then Jack Yi's Trend Research has chosen a significantly riskier route.

Since November 2025, Trend Research has been openly bullish on ETH on-chain, with its core strategy being a typical "staking borrowing—buying—re-staking borrowing" cycle:

• Stake the ETH held into the on-chain lending protocol Aave;
• Borrow stablecoin USDT;
• Use USDT to buy more ETH;
• Continuously cycle to amplify long exposure;

The actual logic of this operation is not complicated; it essentially involves using existing ETH as collateral to borrow funds to continue buying ETH, betting on leveraged gains when prices rise.

This is undoubtedly a highly lethal strategy in a bullish market, but the risk arises from this very mechanism. Once ETH prices fall, the value of the collateral shrinks, and the lending protocol will require additional margin; otherwise, it will trigger forced liquidation, selling ETH at market price to repay the debt.

So when ETH rapidly dropped from around $3,000 to a low of about $2,150 in just five days, this mechanism was forced into "stress mode," and on-chain, a dramatic scene of "small knives cutting flesh" unfolded:

To avoid forced liquidation, Trend Research continuously transferred ETH to exchanges, selling it for USDT, then recharging USDT back to Aave to repay loans, barely managing to lower the liquidation line and buy some breathing room.

As of February 2, Trend Research had deposited a total of 73,588 ETH (worth about $169 million) into Binance in multiple transactions for sale and loan repayment, with total losses on the ETH lending position reaching $613 million, including realized losses of $47.42 million and unrealized losses of $565 million, currently still bearing a stablecoin leveraged loan of about $897 million.

Especially during the rapid drop of ETH in the $2,300-$2,150 range, the entire network was almost watching in real-time as this "stop-loss survival" drama unfolded—every time Trend Research sold an ETH, it was both fighting for its own survival space and inadvertently sending new selling pressure to the market, further tightening the noose around its own neck.

In other words, Trend Research almost killed itself.

Source: Arkham

2. On-chain and Off-chain: A Tale of Two Extremes

Paradoxically, if we temporarily step away from the tens of billions of dollars in unrealized losses of the whales and look at Ethereum from the on-chain structure rather than the price itself, we find a reality that is almost opposite to the sentiment in the secondary market—the on-chain activity of ETH is continuing to heat up.

Data from The Block shows that approximately 36.6 million ETH are currently staked on the Ethereum Beacon Chain, exceeding 30% of the network's circulating supply, setting a new historical high.

It's worth noting that the previous record for staking rate was 29.54%, which occurred in July 2025, and this round marks the first substantial crossing of the 30% red line since Ethereum entered the PoS era.

Source: The Block

From the perspective of financial supply and demand structure, this change is highly significant.

A large amount of ETH being staked means that it has actively exited the free-flowing market, transitioning from a "speculative currency" used for high-frequency trading and speculative games to a "yield-bearing bond" with productive attributes. In other words, ETH is no longer just a gas, a medium of exchange, or a speculative tool, but is increasingly playing the role of "means of production," participating in network operations through staking and continuously generating returns.

Of course, the heavyweight players like BitMine cannot be overlooked—BitMine has staked nearly 70% of its ETH holdings (approximately 2,897,459 ETH) and continues to increase its stake.

Meanwhile, there has been a subtle change in the validator queue, with the staking exit queue nearly empty, while the queue for entering staking continues to lengthen, with over 4.08 million ETH waiting to "enter." In summary, "exiting is smooth, but entering requires a 7-day wait."

This queue size has set a new high since the launch of Ethereum's PoS staking mechanism, and from a time dimension perspective, the steep rise of this curve began precisely in December 2025.

This was also when Trend Research began its aggressive bullish stance on ETH.

Source: Ethereum Validator Queue

It is important to emphasize that, unlike trading behavior, staking is a low liquidity, long-term configuration method that emphasizes stable returns. After all, once funds enter the staking queue, it means giving up the possibility of flexible reallocation and short-term speculation for a considerable period.

Therefore, as more and more ETH chooses to re-enter the staking system, it at least conveys a clear signal: at this stage, an increasing number of participants are willing to lock in for the long term, actively bearing opportunity costs in exchange for certain on-chain returns.

Thus, a highly tense structural picture emerges. On one side, nearly 1/3 of ETH is continuously "cellared," with a steady stream of ETH waiting off-chain to be locked up; on the other side, secondary market liquidity is tightening, prices are under pressure, and whales are forced to stop-loss, frequently exposing their positions.

This clear divergence between on-chain and off-chain creates the most vivid "ice and fire" scenario in the current Ethereum ecosystem.

3. The "Whales" with Open Positions Have Already Made the Menu?

In traditional financial games, the bottom cards are often not publicly transparent; positions, costs, leverage ratios, etc., can be hidden within information-asymmetric derivatives and off-chain agreements.

But on-chain, every transfer, every mortgage, and every liquidation line of the whales is exposed to the entire market 24/7. Once they choose to go long openly, they can easily fall into a physically exhausting battle of "self-fulfilling Murphy's Law."

So from a game theory perspective, although Tom Lee and Jack Yi are both bullish and have made their positions public, they stand at opposite ends of the risk curve.

Despite an unrealized loss of $6.4 billion, BitMine has chosen a spot path of "low leverage, high staking, zero debt." As long as it does not trigger structural risks, it can choose to lie flat within the time window, allowing staking returns to gradually offset volatility.

Indeed, contrary to the majority of market assumptions, BitMine's structure is not aggressive. As Tom Lee emphasized in a social media post on February 2: they have $586 million in cash reserves, and 67% of their ETH is staked, generating over $1 million in cash flow daily. For him, a decline is merely a shrinkage of numbers on paper, not a survival crisis.

On the other hand, Jack Yi has leveraged through Aave's circular lending, thus falling into a negative cycle of "decline - approaching liquidation line - transferring ETH to sell - adding margin - further decline," resembling a "performance art" observed by the entire network.

Shorts do not necessarily have to blow you up; they only need to suppress prices → force you to reduce positions → create passive selling pressure → trigger follow-up trades, which is enough to complete a structural hunt.

This is why every repayment and every transfer from Trend Research is magnified and interpreted as a change in Jack Yi's confidence or whether he will surrender. As of the time of writing, Trend Research has stopped-loss sold 73,588 ETH (worth about $169 million), and the liquidation price of its lending position has dropped below $1,800.

On the same day that Tom Lee posted, Jack Yi also publicly reflected: as the person under the most pressure in the network, he must first admit that being bullish on ETH too early was a mistake… Currently, after the last round of profit-taking, he is waiting for the market to move upward while controlling risks.

Ultimately, engaging in on-chain circular lending to go long is equivalent to laying one's cards on the table for everyone to see. Whether or not there is truly an organized single-point attack, when you publicize your positions, costs, leverage ratios, and liquidation lines on-chain, you have already placed yourself on the target list of all resonant forces in the market.

Of course, to some extent, this is also a path dependency. After all, in April 2025, Jack Yi publicly called for a bullish stance and continued to increase his position when ETH dropped to $1,450, ultimately welcoming a rebound and profit, becoming a "spiritual banner" for bullish ETH.

However, this time, the direction of the story remains uncertain, and Tom Lee's chances of winning are clearly a bit greater.

Conclusion

From Three Arrows Capital to FTX, and now to the publicly observed BitMine, the script has never changed: all collapses begin with excessive arrogance towards long-term certainty.

As Keynes famously said, "In the long run, we are all dead." Jack Yi's mistake was not being bullish on Ethereum in the long term, but underestimating the cruelty of the market during short-term irrational phases. From the moment he chose to go long with leverage openly, he had already sacrificed himself to this transparent algorithmic world.

But from another perspective, this may be a "great cleansing" that Ethereum must undergo. Every cycle requires such a process of whale falls: whales are observed, leverage is squeezed out, path dependencies are shattered, and chips are redistributed.

Only when those who need to stop-loss do so, and those who need to endure have endured, can they truly march forward lightened.