Was $520M Bitcoin short 40x leverage on Hyperliquid a setup?

Analysts speculate that a whale may have set up a $520 million Bitcoin short 40x leverage position on Hyperliquid as a trap to trigger a massive long.

On Mar. 16, a Bitcoin (BTC) whale placed a massive $520 million short position on Hyperliquid (HYPE) using 40x leverage, making it one of the largest known trades on the decentralized exchange.

With a liquidation price of $85,561, the trade would be wiped out if Bitcoin rose just 1.75% from his entry at $83,898. This immediately drew the attention of traders who saw an opportunity to force a liquidation.

Pseudonymous trader Cbb0fe took to X to rally a group to push Bitcoin’s price higher and trigger the liquidation. The price surged by 2.5% within minutes on the same day, nearly hitting the whale’s threshold before they added more funds to raise their liquidation price.

According to 10x Research’s Mar. 17 report, analyst Markus Thielen noted that this event is part of a growing trend involving the democratization of stop-loss hunting. In this trend, independent traders, not just institutions, coordinate to move the market, powered by the transparency of leverage trading on DEXs.

Some analysts, however, think the whale’s massive position might be a calculated strategy rather than a case of a careless short gone wrong. According to cryptocurrency analyst Josh Man, the whale might be intentionally exposing their position to liquidation in order to support a price rally, a rare tactic known as “self-liquidation.”

So this there is a fairly rare and not widely used technique of self-liquidation and this FEELS a little like that. In such events, the seller is actually creating a bomb designed to go off and create a rally from the liquidation of his own short. One would expect that he has… https://t.co/JNcnCLO2E0

— Josh Man (@JoshMandell6) March 17, 2025

If the whale holds an even larger long position elsewhere, their own short liquidation could send Bitcoin higher, benefiting their long position significantly.

This isn’t the first time Hyperliquid has seen such high-stakes plays. Just last week, a trader placed a $285 million leveraged Ethereum (ETH) bet that resulted in a $4 million loss for the platform. In response, Hyperliquid reduced leverage limits for Bitcoin and Ethereum.

Now, the crypto community is watching the price movement of Bitcoin. Further upward momentum could be fueled if the whale’s short position is liquidated. In any case, independent traders and the whale are currently engaged in a risky game of high-stakes competition in this trade.