Despite the ongoing six-week decline in Ether’s price, cryptocurrency traders have managed to turn the situation to their advantage, making significant profits. One adept trader has cashed in nearly $16 million by expertly using the downturn of Ether’s price. With the use of a leveraged Ether short position, the trader cleverly “borrowed” the underlying cryptocurrency only to sell and repurchase it once the price falls, thus profiting from the asset’s price decrease. This savvy trader entered this high-risk strategy with a 50x leveraged short position when the ETH was priced at $3,388, setting their liquidation threshold at $4,645.
On top of making a significant profit from Ether’s price decrease, the trader further pocketed an extra $2.3 million from the funding fees on their leveraged position. However, it’s important to note that while leveraged trading can result in substantial returns, it also brings higher risks, significantly amplifying any losses. This was made evident in January 2024, when a pseudonymous trader saw a loss of over $161,000 in a single trade due to being liquidated on a leveraged position, exemplifying the risks associated with such a high-risk strategy.
In recent trading, Ether’s price has slipped further, dropping more than 4% in the 24 hours preceding 9:43 am UTC on Feb. 2 to trade at $3,107. While it fell to a daily low of $3,068, it managed to stay above the $3,000 mark, according to Cointelegraph Markets Pro data.
According to Aurelie Barthere, principal research analyst at Nansen, Ethereum will need more fundamental blockchain activity to reverse its ongoing decline. With other layer-1s rivalling Ethereum in terms of apps, use cases, fees, and amount staked, Ethereum could stand to benefit from greater collaboration with both private and public sector entities. This would be incredibly beneficial, especially in the United States given the current positive regulatory momentum for blockchain and crypto.
Popular crypto trader Cas Abbé suggested that Ether would need to regain its $3,400 value to potentially trigger a reverse course towards the $4,000 mark. Standing at its current resistance level of $3,240, Ether might potentially attract over $1 billion in cumulative leveraged short liquidations if it were to rally above, as per CoinGlass data.