A trader’s large bet against Ethereum caused lose a large chunk of his $2 million margin. Considering the steady and steady rise in ETH prices in recent weeks, the stakes could be higher.
In a series of screenshots shared on Reddit on July 3, a GMX trader has been aggressively “cutting” Ethereum with high leverage, a move that has seen the trader lose hundreds of thousands in USD. GMX is a popular decentralized finance (DeFi) protocol that allows users to trade perpetual futures contracts, including ETH, with up to 50x leverage.
Ethereum prices rise 20% in 2 weeks
Despite facing significant losses from the forced liquidation of his short positions, the trader appears unfazed and continues to double his bets, placing high-leveraged short positions without concern.
Since mid-June 2023, Ethereum prices have been rising, expanding 20% at spot rates. Hovering above previous settlement levels at around $1,900, the coin is now trading around $1,945. Although the buyers were unable to push spot rates higher, 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.
Driven by fundamental activities and mainly by the confidence of the cryptocurrency community in general, Ethereum has been marching higher, following the performance of Bitcoin. The direct price correlation against the USD between Bitcoin and Ethereum could have benefited bulls during the rally.
Comments from the United States Securities and Exchange Commission (SEC), alleging that some of the native coins of some of Ethereum’s competitors, including Algorand, Cardano, and Solana, are unregistered securities that they could have provided tailwinds for ETH, cementing its positions as a leader. Smart contract platform.
The representatives of the SEC, especially its chairman, Gary Gensler, have not committed to easily classifying the status of ETH. Any clarification could increase prices or force a sale depending on the agency’s classification.
Trader is doubling down on ETH Shorts
Despite ETH steadily rising over the past two weeks, the trader, records reveal, has been cutting ETH from around $1,700 to spot rates. However, the trader began to aggressively sell ETH from June 26.
In total, the trader opened two positions. One with 19X leverage was for $12 million, while the other with 7X leverage was for $1 million. As prices rose, collateral representing $12 million of the 19X leverage position was closed. This did not stop the trader from opening another position. According to his trading history, another short position was opened with a stop at $1,999, with 30X leverage.
It remains to be seen if ETH prices will increase in the coming weeks. All that is apparent is that the coin’s price has held its ground, challenging the sellers that have been active from mid-April to the first half of June. In the medium term, the $2,000 and $2,100 settlement levels are critical price points that could shape ETH’s trajectory in the second half of 2023.
Featured Image from Canva, Chart from TradingView
