Ethereum trader scores $5mln in 10 days – But here’s a catch…

An Ethereum trader using the address “0xa2e8” made an astounding $4.93 million in profit in just five days. In fact, by the 10th day, the trader had earned $5 million by actively trading ETH in both directions. 

Simply put, the trader took short positions when prices were expected to fall and long positions when prices were expected to rise.

As of the latest update, the traders’ bet had a 90% win rate, as nine of the ten trades were profitable despite volatile market conditions.

However, with 20x leverage and a short position of 17,000 ETH, the trader is currently betting against the price of Ethereum. In this bet, the trader has put in a total value of about $29.32 million.

By doing this, the trader’s potential profits and risks were greatly increased, as they only had to put a small portion of the position’s total value as collateral. 

Will this have any impact on ETH’s price? 

Now, even though a trader made a $29.3 million short position in Ethereum, it is unlikely that this will have a major impact on ETH’s price. However, there is still room for an indirect effect.

The main cause behind the possible price swing could be the 20x leverage, because of which even a slight increase in the price of ETH could force the trader to repurchase ETH to cover losses. As a result, this could lead to a short squeeze and accelerate price movement upward.

ETH’s market dynamics

All this happens as ETH was trading at $1,718.39 following a 2.5% increase over the previous day. 

Whereas Ethereum’s Liquidation Chart displayed a comparatively subdued liquidation environment compared to the massive liquidation cascades observed earlier in the month. 

The chart showed a notable short liquidation event of about $30–40 million occurred as ETH’s price was trying to stabilize and recover around the $1,650–$1,700 range.

This suggests that some bearish traders were compelled to shut down their positions as ETH rose in value. However, there were very few long liquidations, indicating that bullish traders were not under much pressure despite the recent market turbulence.

What’s ahead?

To put it simply, this means that the leverage imbalance has begun to normalize, making bears more susceptible as ETH tries to reach a short-term bottom.

Hence, if this trend persists, additional upward price movement may lead to more short liquidations and more short positions building up, generating a squeeze that supports ETH’s recovery.

Yet, with the crypto market recently experiencing volatility due to a new round of forced liquidations brought on by shifting sentiments, concerns remain.

Final Summary

• By betting on both short and long positions, an Ethereum trader made $4.93 million in profit in just 5 days.
• Despite such massive profit, this move is unlikely to impact the price of Ethereum.