Recent market volatility has highlighted the substantial risks inherent in leveraged digital asset trading, as exemplified by the significant unrealized losses incurred by prominent investor Jeffrey Huang, widely known as “Machi Big Brother.” Within a two-week span, Huang experienced a dramatic shift in his Hyperliquid account, moving from an approximate $44 million profit on the Plasma (XPL) token to an unrealized loss of nearly $9 million. This substantial swing is attributed to a leveraged long position on XPL, which has seen a decline of up to 46% from its peak. The position, currently carrying a 5x leverage, has a liquidation threshold of $0.5366, and has already incurred over $115,000 in funding fees.
Despite this significant setback, Huang’s overall account remains in a profitable state, with a net positive balance exceeding $11.6 million. This resilience is partly due to a separate 15x leveraged Ether long position, which, while incurring substantial funding costs of approximately $534,000, currently holds an unrealized profit of about $534,000. This situation underscores the dual nature of highly leveraged trading, where substantial gains can be rapidly eroded by market corrections.
This recent downturn follows Huang’s sale of a $25 million Hyperliquid position on September 29, which resulted in a $4.45 million loss. This move occurred amidst concerns raised by Maelstrom, the family office fund of BitMEX co-founder Arthur Hayes, regarding impending HYPE token unlocks. The HYPE token is anticipated to face its initial significant test on November 29, coinciding with the commencement of its 24-month vesting schedule.
The market sentiment surrounding Plasma (XPL) is complex, with significant capital movements from “whales” indicating a potential belief in a price recovery. On-chain data reveals that whale wallets have collectively increased their XPL holdings by over $1.16 million in the past week. Concurrently, approximately $3.83 million worth of XPL tokens have been withdrawn from exchanges, suggesting a holding sentiment among these large holders. Notably, one whale wallet, “0xd80D,” acquired $31 million worth of XPL on Hyperliquid, now possessing a total of over $40.2 million in XPL holdings.
The initial surge in XPL’s price was fueled by a confluence of factors, including the launch of Plasma’s mainnet, designed for stablecoin transactions with the promise of feeless exchanges. This was augmented by a substantial airdrop and direct integration with Tether, a dominant player in the stablecoin market. This immediate validation propelled XPL’s price by over 58% in its initial trading hours. Analysts viewed this as a strategic investment in a robust sector of the cryptocurrency market, with XPL positioned as both a utility and loyalty token within a Tether ecosystem reportedly targeting a $500 billion valuation.
However, the rapid ascent was followed by a swift correction. In the 24 hours preceding the reporting, XPL’s price saw a nearly 3% decline, settling around $1.04. This represents a substantial retreat of nearly 40% from its all-time high. Such sharp price adjustments are often a consequence of airdrop recipients realizing profits and the inherent volatility of new projects. With XPL’s market capitalization briefly exceeding $2 billion, reaching the 51st position globally, a consolidation phase was widely anticipated.
Further contributing to XPL’s decline are circulating claims that Plasma was developed by the same team behind “Blast,” a project that has encountered significant controversy since its late 2023 launch. Blast has been associated with various security incidents, including hacks, alleged rug pulls, network disruptions, and debates surrounding its development transparency and token distribution. Despite these challenges, some analysts contend that these negative narratives are unsubstantiated and potentially orchestrated to create artificial selling pressure. The project faces additional potential selling pressure with an upcoming unlock of $90 million worth of XPL tokens scheduled for October 25, positioning it as the third-largest token unlock by value for the month.
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Blockchain developer and writer, Daniel combines hands-on coding experience with accessible storytelling. He holds multiple blockchain certifications and authors technical explainers, protocol deep-dives, and developer tutorials to help readers navigate the intersection of code and finance.