Trader earns nearly $16 million from Ethereum price drop
A cryptocurrency trader made $15.7 million in unrealized profit by taking a leveraged short position on Ethereum during the asset’s price decline. The strategy involved borrowing ETH, selling it at the current price, and repurchasing it at a lower price, allowing the trader to profit from the asset’s depreciation.
According to Cointelegraph, the trader opened a 50x leveraged short position when ETH traded at $3,388, with a liquidation threshold of $4,645. Additionally, the trader earned $2.3 million in funding fees from this position.
While leveraged trading can amplify profits, it also significantly increases risks, potentially leading to a total loss of investment. For example, in January 2024, a pseudonymous trader lost over $161,000 after being liquidated from a margin position, demonstrating the potential dangers of leveraged trading.
Ethereum faces continued pressure
On February 2, the Ethereum price dropped by more than 4%, falling to $3,107. However, ETH managed to stay above the critical $3,000 psychological level.
According to Aurelie Barthere, a lead research analyst at Nansen, Ethereum will need a boost in fundamental blockchain activity to break out of its six-week downtrend.
“Other layer-1 blockchains are catching up with Ethereum in terms of applications, use cases, fees, and staking volume,” Barthere stated.
The analyst believes that Ethereum could benefit from increased collaboration with both private and public sectors, especially in the US, given recent regulatory momentum in favor of blockchain and cryptocurrencies.
Recently, Solana surpassed Ethereum in daily revenue for the first time, driven by the success of the TRUMP token.
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