The investment firm Trend Research has drastically reduced its market exposure, selling over 400,000 ETH to address the looming risk of Ethereum liquidation. This financial maneuver follows a 30% collapse in the asset’s price, forcing the treasury to liquidate positions to cover its outstanding collateralized loans this Friday.
Jack Yi, linked to the company, has had to adjust his aggressive accumulation strategy due to global market pressure, marking a milestone of extreme volatility during the current week. According to Arkham data, the firm transferred 411,075 ETH to Binance, generating doubts about the stability of the price in the short term.
Deleveraging strategy facing critical support levels
The investment vehicle accumulated its holdings using a lending system on Aave, where it used ETH as collateral to acquire more assets, being a high risk factor when prices fall below $1,700. The massive transfer of funds aims to reduce leverage and prevent the forced execution of its collateralized positions.
Conversely, the firm still holds approximately 247,080 Ether on its balance sheet, after reaching a peak of 651,170 units last Sunday. This inventory reduction reflects defensive risk management, evidencing a clear lack of conviction for the moment regarding an immediate recovery in the market for the leading smart contract cryptocurrency.
Will Trend Research manage to avoid the execution of its debts on Aave?
The company’s viability depends on the price staying above critical levels located between $1,698 and $1,562. If the price breaks these thresholds, the automated system would trigger the remaining Ethereum liquidation, which seems unlikely without an entry of additional selling pressure that breaks current supports.
Despite the situation, Yi has stated on social media that he maintains a bullish long-term outlook, although he admits to having called the market bottom prematurely. Currently, the firm navigates turbulent waters as investors closely monitor its moves, accentuating the deep corrective phase the ecosystem has been undergoing since last October.
Finally, the market watches how giants like Bitmine retain million-dollar profits, contrasting with the financial fragility of highly leveraged firms. Caution prevails among institutional traders, who maintain a cautious stance regarding the possibility of new massive liquidation events affecting global liquidity.
