Is President Trump selling Bitcoin? WLFI pays off Aave debt with WBTC to avoid liquidation but risk remains
A pockets attributed to President Donald Trump’s World Liberty Financial, which is managed by his sons, withdrew roughly 173 wrapped Bitcoin from Aave V3 on Feb. 5 and bought them to repay $11.75 million in stablecoin debt.
This sequence reveals the mechanics of voluntary deleveraging: as Bitcoin’s drawdown under $63,000 forces whales to promote collateral and cut back leverage, protocol liquidation engines set off at worse phrases.
The tackle 0x77a…F94F6, labeled as WLFI on Arkham Intelligence, withdrew roughly 73 WBTC and 100 WBTC from Aave V3’s collateral pool, then repaid 5,037,001 USDC and 6,710,808 USDC to the protocol in separate actions.
Although there isn’t any affirmation relating to the pockets’s possession, on-chain intelligence platforms and prior reporting have linked related exercise patterns to World Liberty Financial’s documented positions on Aave involving WBTC and ETH collateral.
Nevertheless, the pockets turned Bitcoin publicity into money to cut back leverage and lift well being issue buffers. The pockets nonetheless holds substantial publicity, with roughly 13,298 WETH and 167 WBTC as Aave collateral backing $18.47 million in variable-rate USDC debt.
However, its well being issue now stands at 1.54, comfortably above Aave’s liquidation threshold of 1.0.
Why whales are selling collateral now
Chaos Labs reported roughly $140 million in Aave V3 liquidations over 24 hours during a recent wave. Meanwhile, 21shares flagged $3.7 billion in liquidations over the weekend.
Those figures reveal leverage being flushed system-wide, not simply on Aave or decentralized lending, as positions hit well being issue thresholds and protocols pressure collateral gross sales to cowl unhealthy debt.
The distinction between voluntary and compelled deleveraging is execution high quality, not market influence.
Selling 173 WBTC at $69,000 generated roughly $12 million, sufficient to cowl the debt compensation. Waiting till the well being issue drops under 1.0 means Aave auctions the identical collateral at 5-10% reductions throughout stress durations, leaving the whale unable to management the timing.
Both outcomes take away Bitcoin from the market and remove the leverage that will have recycled capital into future purchases.
At a well being issue of 1.54, the pockets has runway but not consolation. A 38% drawdown in collateral worth would trigger liquidation.
Bitcoin has already fallen by up to 50% from its peak, and technical fashions level to $38,000 as a possible help degree, suggesting one other 43% decline from present costs.
That makes selling collateral to elevate well being issue buffers rational risk administration, even when it provides selling stress.
The suggestions loop throughout markets
Aave’s variable borrow charges respond to utilization. As whales deleverage and demand for stablecoin liquidity spikes, borrowing prices rise. That will increase the carrying price of leverage, pushing extra whales to trim positions.
Simultaneously, exit liquidity deteriorates: bid-ask spreads widen, orderbook depth shrinks, and slippage on giant trades will increase. The result’s a suggestions loop the place selling begets extra selling, not from panic but from balance-sheet arithmetic.
Spot Bitcoin ETF flows compound the stress. Crypto’s whole market capitalization decreased to under $2.1 trillion from its Oct. 6 peak, coinciding with persistent ETF outflows as institutional allocators rotate towards safer belongings.
21Shares flagged heavy redemption days in current weeks. When ETFs had been accumulating by way of 2024 and early 2025, they absorbed provide throughout volatility.
That bid has reversed, leaving DeFi whales because the marginal price-setters, and people whales are actually selling collateral to repay debt relatively than including publicity.
Three paths ahead
Orderly deleveraging is the bottom case.
Whales promote collateral progressively, repay debt, and cut back leverage with out triggering mass liquidations. Markets stabilize at decrease costs with much less leverage, but persistent selling stress from collateral gross sales and the disappearance of reflexive bids hold restoration makes an attempt shallow.
Auction cascade is the draw back situation. Another sharp leg down triggers protocol liquidations earlier than whales can act voluntarily. Aave, Compound, and different platforms compete to clear unhealthy debt, processing collateral quicker than markets can take in it.
Liquidation quantity spikes, spreads blow out, and compelled gross sales at public sale reductions amplify the drawdown.
Cross-market liquidity shocks represent tail risk. ETF outflows speed up, by-product open curiosity continues compressing, and whales rush to promote collateral earlier than changing into the final by way of the exit.
Voluntary deleveraging and compelled liquidations mix to create dislocations by which spot costs diverge from derivatives, or on-chain venues commerce at reductions to centralized exchanges.
| Feature | Voluntary deleveraging (promote/repay early) | Forced liquidation (public sale) | Why it issues on this drawdown |
|---|---|---|---|
| Timing management | High | None | Avoids selling into worst liquidity |
| Execution value | Market/slippage | Auction low cost (stress) | Forced gross sales amplify draw back |
| Position consequence | Reduced leverage, greater HF | Collateral seized | Changes conduct from “diamond arms” to “runway administration” |
| Market influence | Distributed promote stress | Spiky liquidation prints | Explains why drawdowns can speed up |
What collateral gross sales sign
The 173 WBTC sale to generate debt compensation is not an remoted occasion but an information level inside a broader sample evident throughout liquidation metrics, open curiosity compression, and ETF flows.
Whales aren’t capitulating. Instead, they’re changing Bitcoin into stablecoins to handle well being elements and prolong runway. That prevents cascades, but it would not cease drawdowns.
Lower leverage means much less capital is recycled into purchases. The reflexive bid that drove Bitcoin from $30,000 to $100,000 operated by way of leverage: whales borrowed in opposition to collateral to purchase extra Bitcoin, amplifying positive factors.
In reverse, whales promote collateral to repay debt, eradicating each the publicity and the mechanism that will amplify recoveries.
Spot ETF outflows remove the institutional buyers who beforehand absorbed this provide. The liquidity vacuum left behind means promote stress from deleveraging whales meets weaker demand from all purchaser classes, as institutional allocators rotate to security, leveraged merchants reduce risk, and retail contributors await clearer indicators.
The pockets’s $11.75 million debt compensation, funded by selling 173 WBTC, crystallizes the selection dealing with each leveraged place: handle the exit now or let protocol mechanics determine later.
Most are selecting now, and the cumulative influence of these particular person choices is a market the place conviction plus scale not equals compounding. It equals orderly liquidation, one WBTC sale at a time.
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