Let's break down this case step by step: what the trader did, what his goals are, and what risks he took.
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What happened?
1. The trader deposited 1.21 million USDC on Hyperliquid — this is his collateral (margin).
2. Opened a short position at $SOL with 20x leverage:
• This means that with $1.21 million he 'borrowed' about $16M to play for a decline in the price of SOL.
3. Opened a position on 97,500 SOL at $164.9.
4. Liquidation price — $172.96:
• If the price of SOL rises to $172.96 — his position will be liquidated, and he will lose everything (or almost everything).
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What does he expect to earn?
If SOL drops, for example, to $150:
• A position of $16M turns into ≈ $14.6M.
• The difference ($1.4M) becomes the trader's profit.
With 20x leverage — even a small movement brings huge profits. For example:
• A -10% drop in SOL gives the trader +200% on the invested 1.21M.
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Pros of this strategy
1. Instant access to a large position.
• At 20x leverage, $1M turns into a $20M position.
2. Strong market movement brings quick profits.
3. You can profit from a decline, not just from an increase — this is short selling.
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Cons and risks
1. The liquidation price is very close:
• Just +5% price increase — and $1.2M goes up in smoke.
2. High volatility is the enemy of leverage.
• Even a temporary 'blow' by a candle upwards can destroy a position.
3. Funding (fee for maintaining a short) — can 'eat' into profits, especially if many people are shorting.
4. Emotional pressure:
• Such a large leveraged bet creates significant tension.
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Why it is important for the average investor to understand
• Such positions affect the price of SOL: liquidations can trigger a cascade of increases (short squeeze).
• The shoulder is a weapon of mass destruction: useful only in skilled hands.
• The market can go against logic — even if SOL is overbought, it can rise, and the trader can lose everything.
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Summary
This trader is a professional with a high risk tolerance. He is playing against the trend, betting on a pullback, but his position is extremely vulnerable. The price is currently around $170, and liquidation is at $172.96. The slightest upward movement — and $1.2M will burn.
Conclusion: such actions are not for beginners. It's better to learn from others' trades than to lose your deposit in a short market against the bulls.
