This week, in the derivatives platform Hyperliquid, an address referred to by the community as the top short seller continuously increased its short position by 105.53 BTC within approximately 20 minutes. Its total nominal short position on the platform was rapidly pushed up to about $246 million, instantly becoming the center of attention. Notably, the position structure of this address is extremely bearish—BTC and ETH high-leverage short positions account for about 89.8% of its overall position. It also shorted various tokens such as SOL, HYPE, KPEPE, creating a highly concentrated, cross-asset aggressive short combination. In stark contrast, on-chain data shows another side: over a recent period, large wallets holding more than 1000 BTC collectively increased their holdings by 104,340 BTC, with substantial real capital continuously buying on the spot side. This article will connect the narrative of this "$246 million derivatives gamble" with "on-chain whale spot accumulation," linking it to the VanEck new public chain ETF narrative, expectations of a U.S. government shutdown, and the tightening of global regulations, dissecting how this long-short game intertwines with macro and compliance changes.
Perspective Breakdown
● Position Structure and Leverage Choice: From public data, the core position of this Hyperliquid address consists of two parts—approximately $122.9 million in BTC short positions, with about 40x leverage, and nearly $100 million in ETH short positions, with about 25x leverage. This differentiated allocation, using higher leverage for BTC and slightly lower for ETH, indicates a bearish outlook on both but a greater willingness to endure the volatility and liquidation pressure on the BTC side, concentrating more risk exposure on Bitcoin as the main asset.
● Opening Prices and Data Boundaries: According to a single on-chain analysis source, the reference opening prices for the large short positions of this address were approximately $90,671 for BTC and $3,026 for ETH. These price anchors provide a rough range for the market to assess its profit and loss space and potential liquidation pressure. However, since all data comes from the same source and lacks cross-validation, it is essential to maintain restraint in judgment, avoiding the extrapolation of precise opening rhythms or automatic calculations of "safe zones," and it is even less advisable to mythologize these points as absolute key price levels in the market.
● Cross-Asset Systematic Shorting: In addition to the main positions in BTC and ETH, this address also simultaneously shorted various tokens such as SOL, HYPE, KPEPE on Hyperliquid, forming a broad short combination covering major assets and altcoins. This layout resembles a bet on a "market-wide volatility correction," rather than a simple attack on the fundamentals of a single currency, reflecting a systematic pessimistic expectation for the short-term prices of overall risk assets, rather than a hedging behavior driven by single-point events.
● Information Gaps and Cognitive Restraint: Currently, there is no public information regarding the historical operation records, past win rates, or sources of funds for this address, nor can it be determined whether it is backed by an individual, a team, or some type of institutional funds. All speculations surrounding its identity and style are unfounded. This article deliberately focuses only on the on-chain verifiable position size, leverage multiples, and asset distribution, avoiding the demonization or deification of its behavior through narrative storytelling, which could create a false sense of "following the big players" or "betting against them" for readers.
Interwoven Narratives
● Spot Accumulation and Derivatives Gamble Hedging: On-chain data shows that the group of large wallets holding more than 1000 BTC collectively increased their holdings by 104,340 BTC in the most recent statistical period. At current prices, this represents a buying power in the spot market worth billions of dollars. This behavior sharply contrasts with the high-leverage short position of $246 million nominal value on Hyperliquid—where the former continuously absorbs chips under no leverage or very low leverage conditions, while the latter amplifies short-term price volatility exposure through tens of times leverage, clearly marking the significant divergence in long and short positions on-chain and in contract ledgers.
● Time Dimension and Risk Preference Misalignment: If market participants are categorized by time perspective, one end consists of derivatives shorts betting on short-term price corrections with 40x and 25x leverage, having extremely limited room for error and facing constant liquidation risks; the other end comprises large wallets that continuously buy spot with real capital, focusing more on trends over the next few months or even years, rather than the fluctuations within a few days. This misalignment of time dimensions and risk preferences means that although buyers and sellers within the same price range are counterparty positions, they do not share the same definitions of winning and losing.
● Divergence in Interpretation Paths: From a market interpretation perspective, a scenario can exist where high-leverage shorts bet on "short-term price corrections after a rise" and on severe volatility driven by macro events, while spot whales focus on "the medium to long-term upward trend remains, and corrections are buying opportunities." Within this framework, both long and short positions do not necessarily constitute a simple zero-sum bet but rather coexist as strategies across different time scales, where short-term bearishness does not automatically negate long-term bullishness, and vice versa.
● Emotional Amplification and Neglect of Long-Term Buying: However, in practical terms, short positions with billions of dollars in nominal value and tens of times leverage are more likely to seize narrative focus. Retail emotions are often first drawn by these exaggerated numbers and liquidation imaginations, neglecting the slow but steady accumulation of spot on-chain. Once media and social platforms excessively amplify labels like "Air Force Commander" and "$246 million gamble," market participants are more likely to follow short-term fluctuations out of fear or excitement, rather than calmly assessing the deeper signals represented by long-term capital flows.
Deep Game
The upcoming Avalanche Spot ETF from VanEck is seen as a tentative layout of traditional financial capital towards new public chain assets following Bitcoin and Ethereum. If this product is successfully launched, it will signify that mainstream institutional funds are beginning to access a broader range of on-chain assets through compliant channels, rather than being limited to the two major assets, BTC and ETH, opening new funding avenues for the public chain sector.
From a market structure perspective, the anticipated launch of the Avalanche Spot ETF sends an important signal to risk-averse funds: the compliance market's preference for single assets is shifting towards a diversification across multiple public chains, and the rotation and reallocation of traditional funds among different public chains may gradually strengthen. This structural change could drive incremental trading in both spot and derivatives related to the relevant ecosystems and prompt funds to engage in more frequent relative value games between BTC, ETH, and other public chains.
In this narrative context, the short combination covering BTC, ETH, and various altcoins on Hyperliquid can also be viewed as a hedge against potential sector rotation—if the market experiences "capital flowing from BTC and ETH to new targets like Avalanche" due to the new ETF narrative, then the systematic shorting of existing mainstream and altcoin assets may be a way for some traders to attempt to capture short-term structural mispricing. However, due to the lack of strategy explanations and more position details for this address, such linkage can only remain a discussion at the level of possibilities, rather than rising to definitive causal inference.
The larger context is that when traditional institutions enter through ETFs, they typically prefer low leverage, strong compliance, and low operational frequency configurations, viewing crypto assets as part of an asset portfolio; while on-chain whales and high-leverage players primarily engage in more aggressive directional games on off-chain and on-chain derivatives platforms. The disparity between the two creates a clear "dual-track system" in the price behavior and volatility logic of the same public chain asset across different markets, providing more space for high-leverage positions like those on Hyperliquid to hedge or speculate.
Interwoven Narratives
● Shutdown Probability and Macro Thermometer: Trading data from Polymarket indicates that the probability of a U.S. government shutdown occurring in the near future is as high as approximately 77%, which itself is a collective vote from the market reflecting a rapid rise in macro uncertainty. For all risk assets, this level of policy and fiscal uncertainty constitutes a potential source of exogenous shock, sufficient to alter short-term liquidity expectations and risk aversion.
● Macro Motivation for High-Leverage Shorting: Against this backdrop, some funds choose to bet on high-leverage shorts, wagering that "if the shutdown risk continues to ferment, it may trigger a tightening of dollar liquidity and a correction in risk asset prices in the short term." The emergence of 40x BTC shorts and 25x ETH shorts on Hyperliquid can be seen as an extreme manifestation of this macro narrative at the derivatives level—participants may not necessarily care about long-term fundamentals but are targeting the severe volatility under the combined effects of "event-driven + liquidity contraction."
● Coexistence of Long and Short Under Dual Narratives: Meanwhile, Bitcoin embodies a dual narrative of being both a "high-volatility risk asset" and a "potential safe-haven asset" in the context of macro turmoil. One side might argue: if the government shuts down and fiscal chaos ensues, market risk appetite will decline, causing Bitcoin to drop alongside risk assets; the other side could argue: when fiat currency and government bond credit are undermined, the relative attractiveness of decentralized assets actually increases. This allows both long and short positions to tell completely opposite stories around the same macro event and simultaneously bet in the futures, perpetual contracts, and spot markets.
● Path Distortion Under Leverage Accumulation: When this macro expectation split is compounded by ultra-high leverage positions, whether the U.S. government's final shutdown expectations are "missed" or "over-expected," it could become a trigger for extreme short-term market movements—if expectations are missed, heavily short positions may face concentrated squeezes, triggering a "short squeeze"; if risks exceed expectations, the long positions facing liquidation may also encounter a waterfall-like crash. Under this structure, price paths are more likely to be dominated by technical liquidations of derivative positions rather than simply reflecting the macro fundamentals themselves.
Deep Game
From a regulatory perspective, this week in East Eight Time, the Central Bank of Brazil proposed compliance certification requirements for crypto-related third-party businesses, and Russia listed the trading platform WhiteBit as an "unwelcome organization," both pointing to the same trend: the overall tightening of the regulatory atmosphere for crypto-related businesses in major global jurisdictions. Although the starting points and technical paths differ across regions, the commonality is a desire to better identify and manage crypto-related risks at the systemic level.
This tightening of regulations poses potential pressure on derivatives platforms and speculative behaviors characterized by high leverage and cross-border operations. On one hand, more platforms may be forced to lower maximum leverage multiples, increase margin requirements, or raise compliance costs to adapt to local regulations; on the other hand, it may also push some high-risk funds towards relatively loose or unclear regulatory gray areas, increasing the fragmentation of market structures. The appearance of 40x leverage and hundreds of millions of dollars in nominal value short positions on Hyperliquid is, in a sense, a microcosm of this structural misalignment.
Regulators hope to reduce systemic risks on a macro level, while on-chain and platform sides continue to see high-leverage, highly concentrated speculative positions, revealing a clear time lag and execution gap between the two. Policies often take months or even years to implement after being proposed, while speculative funds can complete a round of increasing or decreasing positions in just minutes or even seconds. This asymmetry in speed makes it difficult for regulators to completely prevent the emergence of extreme positions like the shorts on Hyperliquid beforehand, forcing them to push for rule iterations through event reflections afterward.
At the same time, narratives from the traditional financial sector are deepening regulators' and the public's stereotype of the crypto market as "highly speculative." For example, Robinhood CIO Gild compared Tesla investments to speculative behaviors in the crypto market, suggesting that both types of assets play a role as "high-volatility bets" rather than stable allocations in the minds of retail investors. This perspective reinforces the public's impression of crypto as a short-term gambling arena and may also influence regulatory attitudes, making them more inclined to view high leverage and complex derivatives as key risk sources when formulating rules, thereby intensifying the policy pressure environment for platforms like Hyperliquid.
Who is Betting on Corrections, and Who is Betting on the Future
Returning to the starting point: the address referred to as the "Air Force Commander" on Hyperliquid is making a bold bet on the short-term decline of Bitcoin and Ethereum with a total nominal position of about $246 million and a maximum leverage of 40x, while on-chain whales holding more than 1000 BTC collectively increased their holdings by 104,340 BTC during the same period, steadily expanding their spot positions. On the surface, this appears to be a head-to-head confrontation, but when viewed from the dimensions of time cycles and risk preferences, it resembles a tug-of-war between distinctly different strategies—high-leverage shorts pursue a return/risk ratio amplified by short-term volatility, while spot whales are betting on a revaluation of value over a longer cycle.
Surrounding this game are not only the position numbers on the Hyperliquid platform but also the new public chain narrative brought by the VanEck Avalanche ETF, the macro uncertainty reflected by the U.S. government's 77% shutdown probability, and the global compliance backdrop formed by regulatory dynamics from countries like Brazil and Russia. These variables continuously accumulate, making the evolution path of the market increasingly complex and unpredictable, and rendering the success or failure of any single position unable to be simply attributed to "right or wrong."
In such a structure, the drama of massive high-leverage positions easily amplifies market sentiment, attracting market participants to focus on short-term dramas like liquidations and squeezes. However, historical experience shows that what truly determines the medium to long-term direction of the market are often those less eye-catching variables: the continuous inflow and outflow of spot funds on-chain, the speed of expansion of compliant channels like ETFs, and the slow evolution pace of global regulation and macro environments. These factors constitute the long-term anchors for prices, rather than a single 20-minute frenzy of position building.
A more prudent perspective is to view this event as an observational window: by contrasting the extreme short positions on Hyperliquid with the on-chain whale spot accumulation, we can understand how derivatives and spot funds are jointly repricing Bitcoin under macro and regulatory waves, rather than simply betting on "whether the shorts will explode" or "whether the longs will win." For ordinary participants, it may be more important to recognize their own time dimension, risk tolerance, and information boundaries, rather than trying to bet on one side or the other. Learning to filter emotions in such high-noise events and distilling truly useful structural signals for their own decision-making is crucial.
In the future, compliance and institutionalization will remain important themes in the crypto industry, and high leverage and high volatility are unlikely to disappear in the short term. The tension between these two forces is the true reflection of the current market.
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