Ethereum Short Gamblers Burned as $26M Gains Turn into $716K Deficit

Once again, Hyperliquid traders have highlighted the unpredictable nature and high stakes of leveraged crypto trading as a huge short bet on

(ETH) swung from a potential $26 million profit to a $716,000 loss in just a few days. The trader, linked to wallet 0xCB92, began by opening a 50,000 short on Hyperliquid, a decentralized derivatives exchange, initially benefiting from falling ETH prices. The trader then increased the wager by adding another 10,000 ETH as the market started to rebound, doubling down on the short. This move backfired when ETH rallied sharply, triggering a stop-loss and erasing nearly all the unrealized gains Hyperliquid Trader Fumbles $26M ETH Short Profit, Faces $716K Loss After Doubling Down [ 1 ].

Although the approach was profitable at first, the loss highlighted how dangerous overconfidence can be in leveraged trading. Blockchain analytics firm Lookonchain noted that the expanded short position became more exposed as ETH rebounded, leading to a swift liquidation. Crypto analysts have called this a warning to others. “Maintaining a short when the market is rising is extremely risky,” said analyst Lina Patel. “Without a hedging long, this became more of a risky gamble than a strategic move” Hyperliquid Trader Fumbles $26M ETH Short Profit, Faces $716K Loss After Doubling Down [ 2 ]. This event echoes other notable losses, such as the recent $3.7 million shortfall by Hyperliquid trader Qwatio on

(BTC) shorts Hyperliquid Trader Fumbles $26M ETH Short Profit, Faces $716K Loss After Doubling Down [ 1 ].

Bearish sentiment in the wider Ethereum market has surged, with both institutional and retail investors ramping up short positions. According to The Kobeissi Letter, Wall Street hedge funds increased their ETH shorts by 40% in one week and by 500% since November 2024. This heavy shorting has contributed to ETH lagging behind Bitcoin, which has more than doubled in the last twelve months, while ETH has only risen by 3.5%. Analysts say this pessimism is fueled by regulatory uncertainty, competition from faster blockchains like

, and broader economic pressures.

Hyperliquid has become a hub for major leveraged trades, with another large trader recently opening a 25x leveraged short on 3,000 ETH, backed by $3.25 million in collateral. The position faces liquidation if ETH reaches $5,291.9, underlining the platform’s appeal for high-risk, fast trades due to its rapid trade execution and substantial leverage. However, this also means that small price changes can cause massive liquidations. For example, a 23% ETH price increase would wipe out the trader’s collateral, while a 30% drop could double their money Ethereum Short Positions Hit Record High as Hedge Funds Bet Against ETH [ 5 ].

Geopolitical events have also helped shape the ETH shorting landscape. In February 2025, ETH fell 37% after former U.S. President Donald Trump announced new tariffs, sparking panic that wiped over $1 trillion from crypto markets in hours. Despite these obstacles, Ethereum ETPs saw strong inflows—with $793 million entering last week alone—indicating that some institutional players still believe in Ethereum’s long-term prospects, especially with the upcoming Ethereum 2.0 upgrade and the potential for clearer regulations.

Hyperliquid’s place in the world of high-stakes trading remains debated. The platform’s Layer 1 network and zero transaction fees attract aggressive traders, but recent losses highlight the importance of strong risk controls. “The crypto world is always full of surprises, but exchanges need to balance new features with protecting users,” said industry veteran Mark Jensen, drawing a comparison between the 0xCB92 incident and James Wynn’s $1.25 billion

long position collapse in May 2025 Hyperliquid Trader Fumbles $26M ETH Short Profit, Faces $716K Loss After Doubling Down [ 1 ]. As Ethereum faces these market challenges, the interaction between leveraged trading, economic forces, and technological change will continue to define its path forward.