Cryptocurrency Market Collapse: Veteran Trader Yi Lihua Loses $700 Million in One Week
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Cryptocurrency Market Collapse: Veteran Trader Yi Lihua Loses $700 Million in One Week
The old wealth-creation logic has already collapsed, forcing the market to search for genuine value anchors amid a harsh winter.
Navigating Web3 tides with focused insightsAuthor: Xie Zhaoqing, Tencent Finance “Insight”
The cryptocurrency market has erased all gains triggered by Donald Trump’s return to power, plunging in an epic crash that forces the word “risk”—temporarily forgotten amid greed—to stare back at every investor with its most terrifying visage.
Over the past week, Bitcoin recorded its largest weekly drop in three years. February 5 emerged as a day no crypto investor had anticipated: Bitcoin fell 13% that day—the steepest single-day decline since June 2022—and briefly dipped below $61,000 in the early hours of February 6.
In this sharp correction, veteran crypto trader Yi Lihua liquidated 400,000 Ether within one week, suffering a $700 million loss and becoming the top “whale” hunted down mercilessly in this crash.
The abrupt reversal caught the market off guard—even seasoned long-term “HODLers.” Worse still, many bullish investors remain unable to pinpoint the precise cause of this collapse.
Multiple crypto investors based in Hong Kong or Singapore told Tencent News “Insight” that while no single trigger can be definitively identified, they unanimously agree the immediate catalyst was the flash crash in silver and gold prices—which accelerated Bitcoin’s downward spiral.
On January 30, news broke that Kevin Warsh—a prominent U.S. “hawk”—had been nominated for Federal Reserve Chair. Markets interpreted this as signaling the Fed would maintain high interest rates to curb inflation, strengthening the U.S. dollar and triggering a >30% intraday plunge in silver. Global risk assets soon followed suit, sliding lower.
A Hong Kong-based crypto entrepreneur told Tencent News “Insight” that Bitcoin’s four-year halving cycle remains valid—underpinning the widely cited “four-year cycle” theory—but when overlaid with external macro factors, volatility intensifies markedly. The halving of Bitcoin’s mining reward every four years remains the core logic behind this cycle.
“This bull run was primarily narrative-driven: expectations around Trump’s pro-crypto policies post-election, anticipated shifts in Fed policy, and MicroStrategy’s (MSTR) corporate treasury model were all viewed as bullish tailwinds.”
Yet multiple industry insiders—including the aforementioned entrepreneur—argue these narratives largely remain ungrounded in tangible business innovation.
Crypto believers hold firm: once a narrative gains market acceptance, traditional capital will continue flowing in, further boosting Bitcoin demand and price. But now those narratives have clearly faltered—stripped of real-world validation. Unlike crypto’s true believers, traditional capital or institutions typically rank digital assets last on their asset allocation lists. When volatility spikes, crypto assets are the first to be sold off.
Yi Lihua’s $700 million loss isn’t merely a top player’s Waterloo—it signals the failure of the crypto market’s longstanding “old narratives.” For years, the market reveled in the ironclad “four-year halving cycle,” the illusion of institutional inflows via ETF approvals, Trump’s policy dividends, and MicroStrategy-style treasury leverage games. Yet this bull market differs fundamentally: it lacks substantive innovation as structural scaffolding—relying instead on macro expectations and emotional storytelling to build castles in the air. When the Fed’s hawkish signal pricked the bubble, the era of sustaining sky-high valuations through storytelling alone came to an abrupt end. This marks a brutal disenchantment for crypto: faith unsupported by underlying application-level innovation crumbles instantly when liquidity recedes; the old wealth-creation logic has collapsed, forcing the market—amid winter’s chill—to search for genuine value anchors.
01 Faith Shattered: A Brutal $700 Million Lesson
Among the prominent crypto “evangelists” hit hardest in this Bitcoin crash are Michael Saylor, Tom Lee, and veteran Yi Lihua.
Michael Saylor’s publicly traded company MicroStrategy currently holds 713,502 Bitcoins—the largest Bitcoin holding among all public companies globally. Tom Lee, hailed as Wall Street’s “prophet,” serves as Chairman of the Board of Bitmine—the publicly listed company holding the most Ether. Both are long-term, steadfast Bitcoin and Ether holders.
Public data shows both executives’ firms have incurred significant paper losses: MicroStrategy’s losses total ~$12.4 billion; Bitmine’s ~$6 billion.
Yi Lihua may be the whale most swiftly “targeted” in this crash. As a vocal bull, all six wallet addresses of his fund are fully transparent.
Beginning February 1, margin pressure forced Yi Lihua and his team into continuous Ether sales—watched in near real-time across the network as he spiraled into a “death spiral.”
Yi Lihua may have briefly considered continuing the fight. In the first four days of February, he sold only ~190,000 Ether and paused selling entirely on February 5—still holding 460,000 Ether at that point.
On February 4, he posted on social media expressing optimism about “this bull market” and calling the current moment “the best time to buy spot.” Public data indicates his average liquidation price dropped steadily—from over $2,000 to ~$1,500—as he deleveraged.
An early crypto participant, Yi Lihua reportedly successfully exited near the top ahead of the “October 11 Event” in 2025, cashing out over $300 million. Within 24 hours on October 11, 2025, Bitcoin plunged from a peak of $120,000, triggering an estimated $19 billion in global liquidations.
Just three days later, Yi Lihua abandoned his stance and began accelerating sales of Ether held by his fund Trend Research.
According to Arkham data, on February 6 Yi Lihua likely decided to surrender entirely—dumping his remaining 440,000 Ether in one go, including nearly 60,000 Ether between 9 p.m. and midnight that same evening.
Yi Lihua may have finalized his liquidation plan as early as February 6 afternoon. Tencent News “Insight” learned he appeared in Hong Kong’s Causeway Bay area that afternoon and remained until around 10 p.m. He showed no visible signs of distress—but simultaneously, his team executed a rapid-fire liquidation operation.
By February 7, his fund held just 20,000 Ether—accumulating losses exceeding $700 million.
Some early crypto investors told Tencent News “Insight”: “Selling 630,000 Ether means Yi Lihua has fully surrendered this time.”
The entire process unfolded with shocking speed: “He lost nearly $800 million in six days.” Crypto data platform Arkham shows Yi Lihua built his position gradually starting November 11, 2025, peaking at 651,000 Ether on January 25, 2026; he then initiated sales on February 1 and fully liquidated within six days.
“Someone like him—a diehard believer—has weathered multiple crypto bull and bear cycles. After making the liquidation decision, all that remains is waiting for the next chance to rebound.” An early market participant told Tencent News “Insight.”
Yi Lihua may now stand as the most prominent Chinese crypto “veteran” targeted in this crash. Arkham data shows his cumulative loss in this round reached $779 million, with peak losses hitting $848 million.
02 Capital Backlash: Traditional Money’s Ruthless Exit
“This crash also severely impacted some traditional investors who entered crypto markets over the past two years,” said Albert Luxon, portfolio manager at a Singapore-based macro hedge fund, speaking to Tencent News “Insight.” These traditional funds mostly entered via ETFs.
The U.S. approved Bitcoin ETFs in January 2024, fueling sustained Bitcoin price gains and attracting massive traditional capital. Public data shows U.S. Bitcoin ETF assets under management (AUM) peaked in October 2025—reaching ~$168 billion across 12 ETFs—coinciding with Bitcoin’s all-time high above $120,000.
“When market volatility rises, such traditional capital prioritizes selling the more volatile Bitcoin assets first,” Albert Luxon told Tencent News “Insight.”
Data confirms this. On January 29, amid broad market turbulence—including U.S. equities—the outflow from Bitcoin ETFs surged noticeably. Public data shows net outflows of $817 million and $509 million on January 29 and 30 respectively, as commodities and other U.S. markets swung violently. Similarly, on February 4 and 5—the days Bitcoin crashed—the net outflows stood at $544 million and $434 million.
Tencent News “Insight” learned from several private banking managers that numerous high-net-worth clients redeemed crypto allocations over the past week.
03 Narrative Collapse: A New Crypto Winter After Illusory Prosperity
Few would deny that a new crypto winter has arrived: Bitcoin has fallen nearly 50%—from its October 2025 peak above $120,000 to roughly $68,000 today.
Investors are panicking in response to the crash. Explanations abound: some attribute it to large-scale profit-taking by early investors after a bull run; others blame Bitcoin’s entry into regulated markets—arguing products like Bitcoin ETFs diluted Bitcoin’s scarcity; still others cite “liquidity drought”—a catch-all explanation for financial market crashes.
Allen Ding, Head of Research at Xinhuo Tech Research Institute, stated these explanations hold merit—but the true core driver may not be singular. He believes consensus itself has fractured. In his view, some steadfast believers see Bitcoin as now partially integrated into mainstream finance—having achieved a kind of “milestone” equivalent to “graduating from faith.”
Crypto evangelist and investor Anthony Pompliano analyzed Bitcoin’s crash Friday, noting that Bitcoin’s breakthrough above $100,000 itself constituted a critical “milestone.”
Many industry insiders—including Allen Ding and Albert Luxon—say “profit-taking” is a key driver behind this crash.
They argue vast numbers of early investors rushed to lock in profits generated during the “euphoric” surge sparked by Trump’s election and pledge to make the U.S. the “global crypto capital”—which drove sharp price increases in Bitcoin, Ether, and other assets.
These early investors’ returns were staggering. Bitcoin, for example, doubled in price between Trump’s announcement of candidacy and early October 2025.
Crashes—or rallies—are nothing new in crypto. Yet seasoned practitioners told Tencent News “Insight” this cycle differs significantly from prior ones: the 2024 bull run was driven far more by “narratives” than by genuine industry innovation.
The Hong Kong-based entrepreneur noted that in previous four-year crypto cycles, foundational innovations emerged: exchanges in 2013, smart contracts in 2017, and DeFi (decentralized finance) products in 2022—each providing fundamental support for preceding bull markets.
But this 2024 bull run bears no relation to innovation—it is purely “narrative-driven.”
He cited examples: from the initial “Trump narrative” to the MSTR treasury model—neither altered fundamentals. While Trump did announce major crypto policies upon taking office, the market overlooked how his family aggressively extracted value from the sector. Michael Saylor’s treasury-company model—where public firms buy Bitcoin as treasury reserves—enabled MicroStrategy to amass over 710,000 Bitcoins. This indeed lifted both stock and Bitcoin prices: the company’s market cap briefly surpassed $120 billion. Yet the model is unsustainable—the firm reported over $12 billion in losses last quarter.
Tencent News “Insight” learned that in August 2025, leading Chinese crypto billionaires Zhao Changpeng and Li Lin seriously considered adopting this model—but both abandoned it by October 2025.
“Without innovation, narratives alone cannot sustain a prolonged bull market. Yet they also cannot predict how long this narrative-deprived bear market will last.”
Some remain cautiously optimistic, suggesting this winter may end faster than past ones. Aside from Yi Lihua, no major billionaires or top-tier firms have collapsed or faced crises—nor have any institutions been accused of misconduct. Such events previously triggered repeated investor trust crises during prior market crashes.
Bitcoin’s foremost bull, Michael Saylor, told investors on February 6 that the sole way to navigate current doldrums is to HODL—ignoring short-term volatility and focusing instead on the full four-year cycle.
On February 7, Bitcoin rebounded slightly to $68,000—still near its lowest level in over two years. This winter won’t end soon; Bitcoin still faces a long road before reclaiming the $100,000 milestone.
Yet some opportunistic buyers are already moving. Tencent News “Insight” learned a Hong Kong-based fund began accumulating positions on February 6—though exact size remains unknown. Additionally, Xinhuo Tech—a Hong Kong-based provider of crypto private banking services—reported receiving numerous inquiries about buying over the past two days.
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