When LD Capital founder JackYi displayed a holding of 142,000 ETH in the community (with a floating profit of 42 million dollars) and increased a long position of 100,000 options, this long-short showdown led by whales had shifted from covert to open play. The entire network's 5 billion dollar short positions face the risk of being squeezed, with a total of 2.3 billion dollars in short positions at CME and AAVE replicating the dangerous script of the short squeeze in Tesla in 2021. On-chain data shows that Wall Street funds are accelerating their positions, and the reduction of ETH supply on exchanges may determine the ultimate direction of this capital war, depending on whether the 2800 dollar life-and-death line is breached. Whale open card calls: the short squeeze tactics behind 142,000 ETH. JackYi's holding data is causing a market earthquake:
Spot holdings: 142,000 ETH (valued at 397 million dollars based on 2800 dollars), average cost of entry 1780 dollars, floating profit rate 57.3%.
Options strategy: buy 100,000 call options for ETH (strike price 3000 dollars), with a contract value of about 28 million dollars and a leverage ratio of 14 times.
Historical performance: since ETH was at 1700 dollars in 2023, consistently bullish, accurately capturing a 70% increase, with its holding address marked by Nansen as 'high win-rate whale'.
This open card short squeeze tactic has three main purposes:
Psychological warfare deterrence: creating an unstoppable bullish expectation through disclosing massive holdings, shaking the confidence of shorts.
Liquidity lock-up: 142,000 ETH accounts for 2.3% of the current circulation, exacerbating spot scarcity.
Options leverage amplification: 100,000 call options can control a nominal market value of 300 million dollars, creating a cycle of 'spot pump - options profit - continue buying spot'.
During the Tesla short squeeze event in 2021, when the short position ratio reached 20%, it triggered a chain reaction, resulting in a final stock price surge of 300%. Although the current short position ratio for ETH has not reached extreme levels, the proactive short squeeze actions of whales could trigger a domino effect.
The life-and-death tribulation of 5 billion in short positions: the short squeeze scene at CME and AAVE.
The options market is witnessing a dangerous long-short game:
The total scale of short positions across the network: 5 billion dollars (historical peak), including 1.5 billion dollars in CME options short positions and 800 million dollars in AAVE short positions.
Key strike price: 1.2 billion dollars in open contracts for 3000 dollar put options, becoming a main defense line for shorts.
Abnormal funding rate: the perpetual contract funding rate has exceeded 0.08% for five consecutive days, with high costs for long positions but still increasing.
The two battlegrounds with the highest risk of short squeezes:
CME institutional shorts: Wall Street hedge funds have laid out short positions in ETH at CME, with an average entry price of 2600 dollars and a current floating loss of 7.7%, with some institutions starting to stop losses.
AAVE liquidation risk: the average collateralization ratio of AAVE platform ETH shorts has dropped to 140%, and for every 100 dollar increase above 2800 dollars, approximately 120 million dollars will be triggered for liquidation.
A stress test by a quant team shows that when ETH breaks 3000 dollars:
CME short position liquidation could reach 800 million dollars.
The AAVE platform will trigger 230 million dollars in chain reactions.
The entire network's options market makers need to sell 150,000 ETH to hedge risks, which may trigger a short-term pullback.
This level of short squeeze is very similar to the tragic situation for shorts during the 500% surge of Dogecoin in 2021.
Wall Street's covert operations: the password for accumulating funds behind the outflow of ETH from exchanges.
On-chain data reveals that institutions are accelerating their layout:
Exchange inventories sharply reduced: over the past 7 days, ETH inventories on exchanges decreased by 186,000 (about 520 million dollars), the largest single-week outflow since November 2023.
Whale address movements: the number of addresses holding over 10,000 ETH has increased by 23, of which 11 are associated with Wall Street asset management institutions.
Cross-border capital flow: ETH inflow to the US compliant exchange Coinbase has decreased by 42% year-on-year, while inflow to the offshore platform Kraken has surged by 300%.
Three main characteristics of institutional accumulation:
Diversified position building: through small transactions of 500-1000 ETH to avoid monitoring, controlling individual transaction amounts between 1.4 million to 2.8 million dollars.
Derivatives hedging: For every 1,000 ETH spot purchased, simultaneously sell 5 million dollars in call options to hedge risk.
Cross-market arbitrage: utilizing the price difference (current premium 1.8%) between Coinbase and Binance for risk-free arbitrage, with a daily average arbitrage volume of 30 million dollars.
A report from BlackRock's crypto fund shows that its ETH holding ratio has increased from 12% in Q1 to 21% in Q2, with the pace of accumulation highly correlated to the outflow data of ETH from exchanges.
2800 dollar life-and-death line: the ultimate battle between news and technicals.
Both long and short sides are fiercely competing at 2800 dollars:
Key technical level:
2800 dollars is the overlap of the historical high in 2023 and the Fibonacci 61.8% retracement level.
The weekly Bollinger Bands upper band is at 2820 dollars, constituting strong resistance.
4-hour chart RSI overbought (72), indicating a need for a pullback.
Catalyst from news:
Before the release of the US May CPI data, ETH suddenly surged 2.3%, indicating that funds are betting on interest rate cuts in advance.
The EU crypto bill is about to be voted on, which may implement tax exemptions for ETH staking.
The probability of the Fed lowering interest rates in June has reached 89%, and hot money may flow into the crypto market.
Long-short power comparison:
Bullish advantage: whale holdings + institutional accumulation + macro positive factors.
Short advantage: technical overbought + high leverage + options hedging demand.
OKX's liquidation warning shows that there are 900 million dollars worth of long stop-loss orders buried in the 2800-3000 dollar range, and once breached, it will trigger algorithmic trading to chase the rise, while below 2650 dollars there are 500 million dollars in short stop-losses, which could cause significant market volatility.
Retail survival guide: offensive and defensive strategies in a short squeeze.
In the face of a potential short squeeze storm, investors with different risk preferences can adopt differentiated strategies:
Bullish offensive strategy (high risk tolerance):
Options leverage game: buy 3000 dollar call options (strike price), while simultaneously selling 3200 dollar call options to construct a bull spread, controlling costs within 4% of the underlying asset.
Spot ladder position building: build a position of 30% at 2750 dollars, increase by 40% after breaking 2800 dollars, with the remaining 30% reserved for pullback replenishment.
On-chain following: track whale addresses like JackYi through Arkham, and when finding daily increases of over 5000 ETH, follow with a 10% position.
Short defense strategy (risk-averse):
Volatility hedging: buying ETH put options while going long on VIX index ETFs to hedge systemic risk.
Partial profit-taking: reduce 50% of short positions in the 2750-2800 dollar range while keeping a core position to deal with pullbacks.
Funding rate arbitrage: When the perpetual contract funding rate exceeds 0.1%, shorting spot while going long on perpetual contracts earns the rate difference.
Neutral strategy (suitable for range-bound markets):
Straddle options strategy: simultaneously buy both call and put options at 2800 dollars, profiting when price volatility exceeds 5%.
Grid trading: set up a grid in the 2600-2900 dollar range, buying and selling 10% of the position for every 100 dollar fluctuation.
Stablecoin arbitrage: using ETH price premium differences across different exchanges for risk-free arbitrage to hedge volatility.
Conclusion: When whales flip the table, how can retail investors survive in the capital war?
The exposure of 240,000 ETH held by the founder of LD Capital marks the beginning of a new era of 'whale open card games' in the crypto market. The short squeeze risk facing the 5 billion dollar short position is essentially a reconstruction of rules between traditional capital and digital assets. For retail investors, what matters is not predicting whether ETH can break 4000 dollars, but understanding the underlying logic of this war:
Information asymmetry determines life and death: the information advantage of whales laying out six months in advance far exceeds the delayed information retail investors obtain from research reports.
Leverage is a double-edged sword: 5 billion in short positions may become prey for bulls, or may trigger a squeeze due to soaring volatility.
Discipline over prediction: before the 2800 dollar life-and-death line, strictly executing stop-loss and take-profit is more important than guessing the direction.
The Tesla short squeeze in 2021 taught us: when capital giants decide to flip the table, market rules may temporarily fail. But when the tide recedes, the true survivors are always those who respect the market and manage risks. At the critical moment of the ETH whale showdown, maintaining clarity is more important than blindly chasing bulls - after all, those who survive the short squeeze massacre are never the most aggressive gamblers, but the most disciplined traders.
