A Hyperliquid trader lost control of a 3,728 ETH leveraged long position in roughly three minutes as Ether broke below $2,600 on October 7, providing one of the clearest on-chain examples of a broader liquidation wave that swept through cryptocurrency derivatives markets.
The position associated with wallet 0xcbab was worth approximately $9.85 million before it was fully liquidated, according to on-chain monitoring by Lookonchain.
The $9.85 million figure represents the notional size of the position rather than necessarily the trader’s cash loss. Separate monitoring cited a loss of close to $200,000, illustrating how leveraged positions can control exposure many times larger than the capital ultimately at risk.
The liquidation came during a sharp market-wide move in which Bitcoin fell below $84,000 and Ether briefly traded below $2,600. Approximately $555.6 million of crypto positions were liquidated over 24 hours, with longs accounting for about $487.2 million of the total.
Most of the damage was concentrated into a much shorter window. Roughly $429.8 million was liquidated over four hours, including about $415.3 million of bullish positions.
0xcbab Was One Visible Casualty of a Much Larger Long Flush
The speed of the 0xcbab liquidation matters more than its headline size.
A $9.85 million position disappearing within approximately three minutes shows how quickly leverage can turn an ordinary market decline into forced selling. Once a leveraged long no longer has enough margin to satisfy maintenance requirements, the position is closed automatically rather than waiting for the trader to decide whether to exit.
That forced sale can add further downward pressure. If enough traders have similar liquidation prices, one group of forced exits can help push the market toward the next group, creating the familiar liquidation-cascade effect.
October 7 appears to have had precisely that broader backdrop. Longs accounted for the overwhelming majority of market-wide liquidations while Bitcoin and Ether declined together.
The event also illustrates why notional values require context. A trader does not need $9.85 million in cash to control a $9.85 million leveraged position. The leverage amplifies exposure, meaning a relatively small adverse move can consume the margin supporting a much larger trade.
This dynamic has become increasingly visible as high-leverage perpetual trading expands. Dave Finances recently examined how MEXC cut leverage on an IOST perpetual from 50x to 20x, highlighting how exchanges alter leverage and funding parameters when risk conditions change.
The Same Wallet Was Already Taking Significant Leveraged Risk
Wallet 0xcbab was not an anonymous account appearing for the first time during Wednesday’s selloff.
On-chain monitoring five days earlier showed the same address holding a large leveraged Zcash position. At that point, it reportedly controlled about 8,065 ZEC worth $11.38 million, was carrying approximately $379,700 in unrealized losses and had already suffered another ZEC liquidation involving roughly $3.11 million of exposure.
That history suggests the October 7 ETH liquidation was part of an established high-risk derivatives strategy rather than an isolated trade.
It also provides an important distinction between sophisticated-looking wallet activity and successful risk management. On-chain visibility allows observers to watch large positions almost in real time, but a large wallet is not necessarily informed capital.
Dave Finances recently saw the opposite side of that equation when a Garrett Jin-linked whale sold about $87.5 million of ETH to reinforce a deeply underwater ZEC short. Large on-chain positions can reveal conviction, but they can also reveal how quickly leverage forces traders to commit more collateral or abandon a trade.
Four New Wallets Shorted Bitcoin Before the Drop
The same market move produced another, very different, on-chain signal.
Shortly before Bitcoin fell below $84,000, four newly created wallets funded Hyperliquid accounts with USD Coin and opened 40x leveraged short positions totaling 148.49 BTC, worth approximately $12.5 million.
The timing immediately attracted attention because the wallets were new and the highly leveraged bearish positions were established shortly before the market moved sharply in their favor.
But timing alone is not evidence of insider trading.
There is currently no public proof that the four wallets had access to nonpublic information, that they were controlled by the same person, or that their trades had any relationship to 0xcbab’s Ethereum liquidation.
A trader can also correctly anticipate a short-term selloff through market structure, funding rates, open interest, technical levels or simple luck. With thousands of transparent wallets trading continuously, unusually successful positions are inevitably easier to identify after the fact than unsuccessful trades opened around the same time.
The appropriate description, therefore, is an unusually timed cluster of leveraged shorts—not confirmed insider activity.
Hyperliquid Makes Both Winners and Losers unusually Visible
What links the ETH liquidation and the BTC shorts most clearly is not necessarily the traders themselves. It is Hyperliquid’s transparency.
Large leveraged positions that would be largely invisible inside a conventional centralized exchange can frequently be monitored at wallet level on an on-chain venue.
This has turned Hyperliquid into an increasingly important source of market intelligence.
Dave Finances recently tracked how Abraxas Capital’s identified Hyperliquid short book grew beyond $980 million, including substantial exposure against Bitcoin and Ethereum.
The advantage is obvious. Investors can observe positioning, collateral movements, realized gains and liquidations with a level of granularity that traditional derivatives markets rarely provide publicly.
But that transparency also creates a temptation to overinterpret wallets.
A blockchain address identifies activity, not necessarily the person behind it. Several wallets can belong to one trader, one wallet can operate for an organization, and fresh addresses provide almost no identity history at all.
The BTC Shorts Do Not Explain the Selloff
The four wallets’ roughly $12.5 million short is also too small, by itself, to explain a market-wide decline in Bitcoin and Ether.
Much larger forces were already operating.
Bitcoin’s rapid decline coincided with hundreds of millions of dollars in forced long liquidations. Ether was also under pressure from investment-product flows: U.S. spot Ethereum ETFs recorded approximately $201.9 million of net outflows on October 6, their sixth consecutive session of withdrawals.
At the same time, the market was not universally bearish. On-chain monitoring showed BitMine acquiring another 12,500 ETH through BitGo, worth about $33.65 million.
That mixture is useful because it demonstrates why a single wallet should not be used to explain an asset’s price movement. Large buyers, ETF redemptions, leveraged longs, leveraged shorts and spot sellers can all operate simultaneously.
40x Leverage Leaves Almost No Room for Error
The biggest similarity between the liquidated ETH trader and the successful BTC shorts is leverage.
At 40x leverage, a trader controls $40 of market exposure for every $1 of initial capital, before accounting for maintenance-margin requirements, fees and other exchange-specific parameters.
That means relatively small price changes can have enormous consequences for the trader’s equity.
The new Bitcoin wallets benefited because the market moved almost immediately in their direction. Had Bitcoin instead moved sharply higher after the shorts were opened, the same leverage that magnified their gains could have pushed them rapidly toward liquidation.
0xcbab demonstrates the other side of the trade. A leveraged long can look manageable until a short burst of volatility removes the remaining margin in minutes.
The regulatory importance of this market is also growing. Dave Finances recently reported that the CFTC is considering a dedicated framework for leveraged crypto trading platforms, potentially bringing more of these products into a formal federal market structure in the United States.
The October 7 Move Is Really a Story About Deleveraging
The most important number from the session may ultimately not be 3,728 ETH or 148.49 BTC.
It is the nearly half-billion dollars of leveraged long positions forced out across the cryptocurrency market.
The 0xcbab liquidation provides a wallet-level view of that process. A trader had close to $10 million of ETH exposure and, once the market crossed the relevant margin threshold, that exposure disappeared in minutes.
The four fresh Bitcoin short wallets show the mirror image: traders positioned aggressively in the correct direction immediately before the same downside move.
The contrast is compelling, but it should not become a conspiracy narrative without evidence.
There is currently no demonstrated connection between the wallets, no proof the BTC shorts were based on privileged information and no evidence that those positions caused the wider selloff.
What the blockchain does prove is simpler and more useful: when leverage is high, a comparatively small move in Bitcoin or Ethereum can rapidly transfer millions of dollars between traders, trigger forced exits and amplify volatility already underway.
On October 7, the market provided both sides of that mechanism within minutes—one highly leveraged trader being forced out as another group of highly leveraged accounts was positioned to profit from the decline.
Johan Shamshad is a financial markets writer at Dave Finances covering cryptocurrencies, trading platforms, brokers, fintech, financial regulation, and developments across global markets. He previously worked at Gulf News, adding newsroom experience to his coverage of fast-moving financial and digital-asset markets.
His work focuses on identifying market-moving events, company developments, regulatory changes, product launches, and shifts in trading and financial infrastructure.
Johan contributes news and analysis designed to help readers understand not only what happened, but why a development matters and how it may affect the wider financial landscape.