How Did This Bitcoin Trader Lose $25 Million in One Weekend?

Gm friends,

You know the feeling, it’s all going well, you’ve got a billion dollar trade open on a decentralized perps exchange, and suddenly a Donald Trump announcement knocks several million dollars off your net worth. That’s what happened for one high-rolling trader this weekend anyway, so let’s take a look at how it unfolded.

Now, here’s what’s in today’s issue:

• Chart of the day: Is this the top?
• David shares his thoughts on a whale losing $20M, the SEC delaying crypto ETF in-kind redemption decision, tokenized treasuries passing $7B, BNP Paribas exploring tokenized shares & Frank Muller launching a limited edition Solana watch.
• Today on chain.
• Altcoin Alpha.

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Chart of the Day

Everyone wants to call the top but here’s the thing–it’s the end phase of the cycle when, typically, the greatest gains are possible, as bull market finales tend to be characterized by blow-off FOMO-driven price surges.

It’s a fine line to tread then (and you can minimize stress by taking profit in stages on the way up), but as for whether BTC is at or nearing the top, the BTC Net Realized Profit and Loss indicator suggests not yet.

When this metric is positive, it indicates more investors selling BTC in profit, and the opposite when it’s negative, while the sharpest spikes have clearly marked cycle tops up to now, as you can see if you look at the peaks in 2013, 2017, and 2021.

By comparison, it currently looks relatively low, suggesting the cycle still has more to come. Keep in mind though that just because an indicator worked in the past, doesn’t guarantee continued accuracy.

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News Now

Hyperliquid Whale Closes Billion Dollar Bitcoin Bets for Multi-Million Losses

It turns out crypto traders like a bit of onchain drama, as all eyes were recently on a huge trade that was opened over on perps DEX Hyperliquid. James Wynn was the trader in the spotlight, grabbing attention when he opened a 40X leveraged long to control a position with a notional value of around $1.2 billion.

After riding the trade through some epic swings–ranging between $20 million unrealized losses to highs of $40 million in unrealized gains–Wynn eventually closed out the position for a loss of around $10 million.

But after closing the long, Wynn decided to continue the entertainment, soon opening a $1 billion short position that he soon closed entirely–this time at a $15.5 million loss–when news came through that Donald Trump was pausing EU tariffs until July; bullish news for risk-on assets but not what you want to hear if you’ve got a billion dollar bitcoin short open.

All of which initially sounds financially devastating but then a look at Wynn’s Hyperliquid record shows that he’s still sitting on almost $25 million in total profits.

So, degen fun and games all round with some very large numbers attached. But also, a couple of points to take away are firstly that we can’t know Wynn’s full position–was he hedging his bets elsewhere? It’s possible, although maybe he just likes gambling with size. And secondly, the whole spectacle functioned as a showcase for Hyperliquid, which demonstrated its value as a decentralized trading platform.

SEC Delays Crypto ETF In-Kind Redemptions Decision

Fidelity and several other issuers have applied to the SEC with requests to allow in-kind redemptions on various spot Bitcoin and Ethereum ETFs, but last week the SEC officially postponed its decision on Fidelity’s request.

This comes after the SEC last month postponed decisions on similar requests from WisdomTree on its BTC and ETH funds, and from VanEck on its BTC fund, while the Commission last week acknowledged BlackRock’s filing–which relates to in-kind redemptions on its ETH fund–but has not yet moved any further on it.

The regulator has not indicated when a decision will be made, and so for now all issuers have to remain patient. In-kind redemptions are usually available in regular ETFs (as in, non-crypto funds), although this kind of process–in which redemptions are paid out in the underlying securities rather than in cash–is usually only available to Authorized Participants.

In the case of the crypto ETFs, this would mean some investors being able to withdraw actual BTC and ETH, although even if it happens–which seems possible as it would simply bring crypto products into alignment with traditional products–the process might not be available for retail investors.

Tokenized Treasuries Soar Above $7 Billion

Think of the clearest use cases for crypto, and tokenizing real world assets would have to be up near the top of the list. As such, RWAs appear to have growing appeal in the TradFi world, and a look at the data shows the total value of tokenized treasuries on-chain has now smashed through the $7 billion mark.

That amount includes US Treasuries, bonds, and cash equivalents and the top product by market cap is BlackRock’s BUIDL fund, managed in partnership with Securitize, and holding a market cap of $2.9 billion with net flows of $392 million over the last thirty days, resulting in a 41% market share.

The top chain for this sector is Ethereum, with an RWA market cap of $5.5 billion, while Stellar is in second place with $483.2 million.

Overall then, RWAs have a lot of momentum and regulatory shifts in the US are all moving in favor of this sector, so expect further growth from here.

BNP Paribas Explores Tokenized Shares

France’s largest bank, BNP Paribas, is exploring the use of blockchain technology for money market funds. The bank’s asset management arm has issued native tokenized shares and tested the process of utilizing them in cross-border payments, and did so using a private blockchain in partnership with a fintech firm called All Funds.

What we’re seeing here then is the integration of blockchains with traditional financial institutions, although in this case–since it makes use of a private blockchain–there is no emphasis on decentralization, and in fact, this kind of testing ties in with the European Central Bank’s interest in CBDCs.

Still though, it’s a sign that the technology driving crypto is influencing all financial institutions, even those that are far from the cypherpunk ideals behind Bitcoin itself.

Franck Muller Launches Limited Edition Solana Watch

If you’ve cashed out a solid wedge of profits you might find yourself thinking about luxury watches, and in that case Franck Muller is no doubt on your radar.

In return, it seems crypto traders are also on the Franck Muller radar, as the iconic Swiss manufacturer has released a limited edition timepiece in collaboration with Solana.

The Franck Muller x Solana Limited Edition comes in distinctive Solana colors with the Solana logo also featured prominently, and is limited to only 1,111 items, each of which is individually numbered. Also, you’ll notice a QR code on the watch face, which is designed to link to your Solana wallet address so that–according to the maker–“your watch becomes your wallet, your keys, and your data”.

Now at this point, you might be scratching your head and wondering whether that isn’t a major security risk, particularly considering the number of alarming headlines recently about criminals attacking crypto industry figures in order to try and steal onchain assets.

For that reason, and depending on where you live, this item might be one to keep in the collection at home rather than flaunt too openly, but if you’re interested, then it’s priced at 20,000 Swiss Francs, or around 24,000 USD.

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Today On Chain

HyperEVM is the general purpose smart contract layer of the Hyperliquid ecosystem, which has up to now been primarily known for its perps trading DEX (as mentioned in the top story above) and is gaining an increasing amount of attention.

With the price of the HYPE token breaking to new ATHs, the number of HyperEVM addresses is also expanding up to new highs, with user numbers now approaching 18,000.

This is impressive growth, but there’s still a huge amount of room for HyperEVM still to accelerate into, as for comparison, Solana has 3.99 million daily unique addresses, on Base that number is 1.5 million, and on the Ethereum mainchain it’s 332,000.

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Altcoin Alpha

• Borrowing protocol Liquity will this week launch sBOLD and yBOLD, both of which are yield-bearing wrappers for its BOLD stablecoin.
• Polkadot has announced that it will soon be launching no-code, one-click rollups. This is in collaboration with Web3 infrastructure firm Asphere, and aims to enable quick, user-friendly deployments.
• Football’s world governing body FIFA is developing its own Layer-1 blockchain in partnership with Avalanche, with a focus on digital collectibles and fan engagement.
• Web3 gaming outfit TreasureDAO will wind down its Layer-2 blockchain Treasure Chain at the end of May, due to operating costs exceeding revenue. Users have been told to bridge assets off the chain by May 30th. 
• Although it only launched in January this year, data shows that trading platform Axiom has now surpassed $100 million in total trading fees, with daily trades topping 2 million twice so far this month.

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Legal Disclaimer

Wealth Mastery (Lark Davis, and the Wealth Mastery writing team) are not providing you individually tailored investment advice. Nor is Wealth Mastery registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. Wealth Mastery is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.

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