A trader incurred a substantial margin loss, amounting to hundreds of thousands of USD, by taking a risky bet against Ethereum. Despite the steady rise in ETH prices over the past few weeks, the trader aggressively shorted Ethereum on GMX, a well-known DeFi protocol that allows users to trade perpetual futures contracts with up to 50x leverage, using high leverage. Screenshots of the incident were posted on Reddit on July 3.
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Trader loses big on GMX after betting against Ethereum with $2 million margin. Ethereum Prices Up 20% In 2 Weeks
The trader remains undeterred despite significant losses from the forced liquidation of their shorts. They continue to short with high leverage without any apparent concern. Since mid-June 2023, Ethereum prices have been steadily rising, expanding by 20% at spot rates. Currently trading at around $1,945, the coin is floating above previous liquidation levels at around $1,900. Although buyers have been unable to drive up spot rates further, the bulls are still in charge. The psychological price point of $2,000 remains the immediate resistance level, along with the April 2023 highs at $2,100. A trader lost big on GMX after betting against Ethereum with a $2 million margin.
Ethereum has been experiencing a rise in value due to its fundamental activities and the confidence it has gained from the cryptocurrency community. It has been following the performance of Bitcoin, and the direct correlation of prices versus the USD between Bitcoin and Ethereum may have benefited bulls during the rally.
Recent comments from the United States Securities and Exchange Commission (SEC) have alleged that some of the native currencies of Ethereum's competitors, such as Algorand, Cardano, and Solana, are unregistered securities. This has provided tailwinds for ETH, solidifying its position as a leading smart contract platform.
However, the SEC has not yet provided a clear classification of the status of ETH, which could either boost prices or force a sell-off depending on the agency's decision. The SEC's representatives, particularly its chair, Gary Gensler, have remained non-committal in this matter.
Trader’s Doubling Down on ETH Shorts
Despite the steady rise of ETH over the past two weeks, the trader, records reveal, has been shorting ETH from when it was at around $1,700 to spot rates. However, the trader began aggressively shorting ETH from June 26.
In total, the trader opened two positions. One with a leverage of 19X was for $12 million, while the other with a leverage of 7X was for $1 million. As prices increased, the collateral representing $12 million from the 19X leverage position was closed. This didn’t stop the trader from opening another position. According to his trading history, another short position with a stop at $1,999 was opened, with leverage of 30X.
Whether ETH prices will rise in the coming weeks is yet to be seen. All that’s evident is that the coin’s price has been firm, defying sellers who have been active from mid-April through to the first half of June. In the medium term, the $2,000 and $2,100 liquidation levels are critical price points that could shape ETH’s trajectory in the second half of 2023.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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