Whale's $21.22 million extreme short position: liquidation price only $1,157 buffer remaining, how dangerous is 40x leverage

A whale opened a short position worth $21.22 million near the BTC price of $88,981.79 with 40x leverage. The most notable aspect of this trade is that the liquidation price is set at $90,046.9—only about $1,157 above the entry price. This means that a mere 1.3% increase in BTC price would trigger liquidation. According to the latest news, this short position holds 238.5 BTC and has become a focal point of current market attention.

Market Signals Behind the Extreme Liquidation Price

Why is this considered an “extreme liquidation price”

The distance between the liquidation price and the entry price determines the safety margin of the position. The details of this short are:

With 40x leverage, even minor price fluctuations can trigger liquidation. The whale setting a position within such a narrow margin suggests two possible scenarios: one, a strong conviction that BTC will decline in the short term; or two, an aggressive risk hedging operation.

Market context: BTC in a downtrend

The current price trend of BTC provides some support for this short:

• 24-hour decline: 1.10%
• 7-day decline: 6.70%
• 30-day increase: 2.27% (but recent downward momentum is evident)

BTC has already fallen over 6% in the past week, indicating a clear downtrend. However, this makes the whale’s short position even more aggressive—continuing to short in a declining market, using an extreme liquidation price as a target.

Real Risks of a 40x Leverage Short

Two possible scenarios for liquidation

The risks faced by this short are not limited to price rebounds:

• Price rebound risk: If BTC rebounds above $90,046.9, liquidation will be triggered. The move from $88,981.79 to $90,046.9 only requires a 1.3% increase.
• Liquidity risk: Under 40x leverage, even if the price approaches the liquidation point, insufficient counterparties could force forced liquidation.
• Market volatility risk: Cryptocurrency markets operate 24/7; any sudden news can cause rapid price swings.

Historical reference

Based on recent data from relevant sources, there have been multiple large liquidation events on-chain. When the HYPE token price fell below $21, multiple million-dollar whale liquidations occurred in quick succession, indicating that in the current market environment, positions at the extreme liquidation price are indeed vulnerable to liquidation.

Speculation on the Whale’s Intent

Why go short on BTC now

From a market-wide perspective, this whale’s move may stem from the following judgments:

• BTC has declined 6.70% over the past 7 days, establishing a short-term downtrend
• Market sentiment is weak, with insufficient bullish momentum
• Institutional participation is increasing but has not reversed the short-term downtrend

Personal opinion

The aggressive nature of this short (40x leverage, extreme liquidation price) suggests that the whale either has a strong expectation of short-term decline or is employing an aggressive risk hedge strategy. However, from a risk management standpoint, such a position exceeds conventional risk controls. If liquidation occurs, the $21.22 million could rapidly shrink.

Future Focus

The fate of this position depends on BTC’s short-term price movement:

• If BTC continues to fall below $88,000, the short will profit
• If BTC rebounds above $90,046.9, the short will be liquidated
• If BTC fluctuates between $89,000 and $90,000, the position remains at risk of being liquidated at any moment

Summary

This $21.22 million BTC short reflects an extreme bearish sentiment in the current market. The whale’s use of an extreme liquidation price to set a 40x leverage position indicates a belief in short-term downside potential, but also pushes risk to the limit. With only a 1.3% increase needed to trigger liquidation, this is no longer a conventional hedge but a high-stakes gamble. The next market move will directly determine the fate of this position.