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The largest short seller on GMX decided to employ 6.6x leverage and short Ethereum when it was priced at $1,703.97. This leverage allowed them to amplify potential gains or losses. Unfortunately for the short seller, the price of ETH has surged, leading to unexpected losses and a precarious situation.

The Magnitude of Losses

With ETH currently trading at $1,945.18, the short seller is now down nearly 70% on their position, translating to losses exceeding $1.2 million. As the price of ETH inches closer to $2,100, a critical level for liquidation, the short seller’s entire position of approximately $12 million in ETH is at risk.

Potential Liquidation and Market Impact

If the short seller’s position is liquidated, it could have a cascading effect on the market. As they are currently shorting a significant amount of ETH, their liquidation could lead to an increase in the price of ETH, potentially pushing it towards the $2,100 mark. Other influential crypto traders, colloquially referred to as “whales,” are taking note of this situation and may seek to exploit it to their advantage.

Market Volatility and Potential Recovery

While the short seller has already incurred substantial losses, there is a glimmer of hope for them. If the market experiences a downturn, the short seller could potentially regain some of their losses and exit their position profitably. However, this outcome hinges on the unpredictable nature of the crypto market, which is notorious for its volatility.

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