Ethereum trader earns $16M as ETH price falls to $3K

A savvy cryptocurrency trader has made nearly $16 million by capitalizing on Ether’s price decline.

The trader generated $15.7 million worth of unrealized profit on a leveraged Ether (ETH) short position, which involves “borrowing” the underlying cryptocurrency from a broker, selling it at the current price and then repurchasing it once the price falls — a strategy used by traders to bet on the price decline of an asset.

The trader opened the 50x leveraged short position when ETH traded at $3,388, with a liquidation threshold of $4,645, Hypurrscan data shows.

The trader earned an additional $2.3 million worth of funding fees on their leveraged position.

While leveraged trading can potentially increase returns, it can significantly amplify downside risks and lead to the loss of the initial investment.

In January 2024, a pseudonymous trader lost over $161,000 worth of funds in a single trade after being liquidated on a leveraged position, illustrating the risks of leveraged trading.

Related: Bitcoin ETFs surpass $125B, BlackRock’s IBIT ranks 31st worldwide

Ethereum needs more adoption to reverse downtrend

Ether’s price fell by more than 4% in the 24 hours leading up to 9:43 am UTC on Feb. 2 to trade at $3,107. Ether fell to a daily low of $3,068 on Feb. 2, managing to hold above the $3,000 psychological mark, Cointelegraph Markets Pro data shows.

However, Ethereum will need more fundamental blockchain activity to reverse its six-week downtrend, according to Aurelie Barthere, principal research analyst at Nansen.

“Other layer-1s are catching up with Ethereum regarding apps, use cases, fees and amount staked,” Barthere told Cointelegraph.

Barthere believes Ethereum could benefit from increased collaboration with private and public sector entities, particularly in the US, given recent regulatory momentum in favor of blockchain and crypto.

Related: Bitcoin’s February momentum hinges on next week’s labor market data

Ether will need to reclaim $3,400 to confirm a potential reversal toward the $4,000 psychological mark, wrote popular crypto trader Cas Abbé in a Feb. 1 X post.

However, Ether faces significant resistance at $3,240. A potential rally above would trigger over $1 billion worth of cumulative leveraged short liquidations, CoinGlass data shows.

Magazine: Pectra hard fork explained — Will it get Ethereum back on track