Written by: Frank, Maiton MSX

Tom Lee and Yi Lihua probably haven't been able to get a good night's sleep these past few days.

After all, if we were to choose the most dramatic protagonist in the crypto market at the beginning of 2026, it would probably not be Bitcoin, nor some new narrative that suddenly appeared, but rather these two ETH "whales" that were publicly put on the hot seat.

Those who enjoy watching the spectacle never think that a funeral is a big deal.

In the past two days, global investors have been holding their breath, collectively watching how the largest and most transparent batch of open long positions in Ethereum history are struggling to survive amidst paper losses.

I. ETH "whales" have already suffered paper losses of tens of billions of dollars.

Every year the events are similar, but every year the "whale" (a metaphor for something different) is different.

In the Web3 context, the term "whale" usually refers to institutions or individuals with substantial funds who are able to influence market trends.

However, in recent years, the positive connotation of this word has been diluted by reality, and it has been transformed into something that is no longer just a heavyweight, but more like a conspicuous target that is most easily observed during violent market fluctuations.

Over the past few days, the two most discussed ETH "whales" in the market are BitMine ( BMNR.M ) under Tom Lee and Trend Research led by Jack Yi. Although both are Ethereum (ETH) bulls, they represent two completely different paths: the former is an Ethereum treasury company that holds the most ETH, while the latter is an investment institution that openly leverages its positions on the blockchain and publicly goes long on ETH.

Let's look at BitMine ( BMNR.M ) first.

As one of the most representative Ethereum reserve companies, BitMine once publicly stated its long-term goal of acquiring approximately 5% of the total Ethereum supply. As of the time of writing, the company has accumulated 4,285,125 ETH, with a market value of nearly $10 billion.

According to Ultra Sound Money statistics, the total supply of Ethereum is currently about 121.4 million, which means that BitMine has directly locked up about 3.52% of the circulating supply of ETH. The progress in realizing this vision can be described as aggressive.

It's worth noting that BitMine officially launched its "Ethereum treasury" transformation after completing a $250 million private funding round in July 2025. In less than six months, BitMine transformed from a Bitcoin mining company into the world's largest holder of ETH.

Even more noteworthy is that even during the darkest moment last week when ETH fell below $3,000 and the market accelerated its collapse, BitMine still chose to go against the trend and increase its holdings, buying 41,787 ETH (approximately $108 million) at a price of about $2,601, demonstrating its unwavering belief in its holdings.

But a problem arises – cost.

Faith has a price. BitMine's average holding cost for ETH is about $3,837, which means that after ETH fell back to around $2,350, its unrealized losses have expanded to about $6.4 billion.

This extremely radical shift to a "currency-based" model has sparked a frenzied valuation race in the US stock market.

Looking back to July 2025, when BitMine first revealed its Ethereum buying strategy, its stock price ( BMNR.M ) was hovering around $4. Subsequently, within six months, the stock price completed a leap from the floor to the sky, reaching a high of $161, becoming the most dazzling "Ethereum shadow stock" in the global capital market.

However, Ethereum was both its strength and its weakness. With the sharp pullback in ETH prices, the premium bubble in BitMine's stock price burst rapidly, and it has now plummeted to $22.8.

If BitMine represents a long-term spot trading approach that trades time for space, then Yi Lihua's Trend Research has chosen a significantly riskier path.

Since November 2025, Trend Research has openly and explicitly taken a long position on ETH on-chain, with its core strategy being a typical cycle of "staking and borrowing - buying - re-staking and borrowing":

• Pledge your ETH holdings into the on-chain lending protocol Aave;
• Lend out stablecoin USDT;
• Use USDT to buy more ETH;
• The cycle continues to expand the long positions.

The actual logic of the operation is not complicated. In essence, it is to use existing ETH as collateral to borrow funds to continue buying ETH and bet on leveraged gains when the price rises.

This is undoubtedly a highly effective strategy in a favorable market, but the risk also lies in this: once the price of ETH falls and the value of the collateral shrinks, the lending protocol will require additional margin; otherwise, it will trigger forced liquidation, selling ETH at the market price to repay the debt.

Therefore, when ETH plummeted from around $3,000 to a low of about $2,150 in just 5 days, this mechanism was forced into a "stress state," and a rather dramatic "cutting at the bottom" phenomenon immediately appeared on the chain:

In order to prevent its positions from being forcibly liquidated, Trend Research continuously transferred ETH to exchanges, sold it for USDT, and then deposited the USDT back into Aave to repay loans, thus barely keeping the liquidation threshold down and buying itself some breathing room.

As of February 2, Trend Research had deposited a total of 73,588 ETH (worth approximately $169 million) into Binance in multiple transactions for sale and loan repayment. The total loss on the ETH lending position reached $613 million, including realized losses of $47.42 million and loans, currently at $565 million, and still at $897 million.

Especially during the rapid decline of ETH in the $2300-$2150 range, the entire internet was almost watching this "stop-loss survival" drama unfold in real time. Every ETH that Trend Research sold was not only trying to gain room for survival for itself, but also unintentionally putting new selling pressure on the market, further tightening the noose around its own neck.

In other words, Trend Research almost killed itself.

II. The stark contrast between on-chain and off-chain operations

Paradoxically, if we temporarily set aside the billions of dollars in unrealized losses suffered by whales and look at Ethereum from the perspective of its on-chain structure rather than the price itself, we will find a reality that is almost the opposite of the sentiment in the secondary market—ETH's on-chain activity is continuing to heat up.

According to data from The Block, approximately 36.6 million ETH are currently staked on the Ethereum Beacon Chain, exceeding 30% of the network's circulating supply, setting a new all-time high.

It's worth noting that the previous highest staking ratio was 29.54%, which occurred in July 2025. This round also marks the first time since Ethereum entered the PoS era that the staking ratio has substantially crossed the 30% threshold.

From the perspective of financial supply and demand structure, this change is of great significance.

The large amount of ETH being staked signifies their voluntary withdrawal from the free market, dramatically transforming them from a "speculative currency" used for high-frequency trading and speculative games into a "yield-generating bond" with productive attributes. In other words, ETH is no longer just a gas, medium of exchange, or speculative tool, but is beginning to play a larger role as a "means of production," participating in the network's operation through staking and continuously generating returns.

Of course, BitMine, a player with substantial assets, is also a key player in this effort. BitMine has already staked nearly 70% of its ETH holdings (approximately 2,897,459 tokens) and continues to increase its stake.

Meanwhile, subtle changes have occurred in the validator queue. The staking exit queue is almost empty, while the staking entry queue continues to grow, with more than 4.08 million ETH waiting in line to "enter". In short, the current situation is "smooth exit, but a 7-day queue to enter".

This queue size has set a new record since the launch of Ethereum's PoS staking mechanism, and from a time perspective, the steep rise of this curve began precisely in December 2025.

This also marked the beginning of Trend Research's open and aggressive long position on ETH.

It is important to emphasize that, unlike trading, pledging is a low-liquidity, long-term allocation method that emphasizes stable returns. After all, once funds enter the pledging queue, it means that the possibility of flexible portfolio adjustment and short-term speculation is given up for a considerable period of time.

Therefore, as more and more ETH chooses to re-enter the staking system, it sends at least one clear signal: at the current stage, more and more participants are willing to take the opportunity cost of long-term locking in exchange for certain on-chain rewards.

Thus, a highly volatile structural picture emerges. On one hand, nearly one-third of ETH is being continuously "hoarded," with a steady stream of ETH waiting to be locked up off-exchange; on the other hand, secondary market liquidity is tightening, prices are under continuous pressure, whales are being forced to cut their losses, and their positions are frequently exposed.

This stark divergence between on-chain and off-chain phenomena constitutes the most striking "two extremes" image in the current Ethereum ecosystem.

Third, is the "giant whale" dish already on the menu?

In traditional financial games, the cards on the table are often not publicly available. Things such as positions, costs, and leverage ratios can be hidden in instruments with information asymmetry, such as derivatives and over-the-counter agreements.

However, on the blockchain, every transaction, every pledge, and every liquidation line of a whale is exposed to the entire market 24/7. Once a whale chooses to openly go long, it is easy to fall into a war of attrition that "proves Murphy's Law."

Therefore, from the perspective of game theory, although Tom Lee and Yi Lihua are both bulls and have revealed their cards, they are at opposite ends of the risk curve.

Despite a floating loss of 6.4 billion, Tom Lee of BitMine chose a spot trading path of "low leverage, high collateralization, and zero debt." As long as structural risks are not triggered, he can choose to lie low within the time window and let the collateralization returns slowly offset the volatility.

Indeed, contrary to what most markets imagined, BitMine's structure is not aggressive. As Tom Lee emphasized in his social media post on February 2nd: they have $586 million in cash reserves, and 67% of their ETH is staked, generating over $1 million in cash flow daily. For him, the decline is merely a shrinking of paper figures, not an impending survival crisis.

Yi Lihua leveraged his position through Aave revolving loans, which led him into a vicious cycle of "falling prices - approaching the liquidation line - selling ETH - adding margin - falling prices again," much like a "performance art" that attracted widespread attention online.

Short sellers don't necessarily have to destroy you; as long as they suppress the price → force you to reduce your positions → create passive selling pressure → trigger follow-up buying, it's enough to complete a structural trap.

This is why every repayment and transfer made by Trend Research is amplified and interpreted as a change in Yi Lihua's confidence and whether he is about to surrender. As of the time of writing, Trend Research has stopped losses by selling 73,588 ETH (worth approximately $169 million), and the liquidation price of the borrowed positions has fallen by $1,800.

On the same day that Tom Lee posted his article, Yi Lihua also publicly reflected: As the person under the most pressure on the entire internet right now, I must first admit that it was a mistake to be bullish on ETH too early... Currently, the previous round of profits has been retraced, and while controlling the risks, we will continue to wait for the market to move upward.

Ultimately, going long on-chain revolving loans is tantamount to laying your cards on the table for everyone to see. Regardless of whether there is an organized, targeted attack, once you disclose your position, cost, leverage ratio, and liquidation line on the blockchain, you are already on the attack list of all resonating forces in the market.

Of course, to some extent, this is also a kind of path dependence. After all, in April 2025, Yi Lihua publicly called for a bullish stance on ETH when it fell to $1,450 and continued to add to his position, eventually resulting in a rebound and profit. He once became a "spiritual flag" for those who were bullish on ETH.

This time, however, the outcome of the story is still uncertain, and Tom Lee's chances of winning are clearly greater.

In conclusion

From Three Arrows Capital to FTX, and now to BitMine, which is under public scrutiny, the script has never changed: all collapses begin with an excessive arrogance regarding long-term certainty.

As Keynes famously said, "In the long run, we are all dead." Yi Lihua's mistake was not that he was bullish on Ethereum in the long term, but that he underestimated the cruelty of the market in its short-term irrational phase. From the moment he chose to use leverage with open information, he had already sacrificed himself to this transparent world algorithm.

But from another perspective, this may be a "great cleansing" that Ethereum must go through. Every cycle requires such a whale fall process: whales are watched, leverage is squeezed out, path dependence is shattered, and tokens are redistributed.

Only when losses are stopped and the necessary patience is exhausted can we truly move forward with a lighter burden.