Trader Bets Against Ethereum, Loses a Huge $2 Million Margin on GMX

A trader’s large bet against Ethereum forced him to do so lose A big chunk of their $2 million margin. Given the strong and steady rise in ETH price over the past few weeks, there may be more at stake.

In a series of screenshots shared on Reddit on July 3, a trader on GMX is aggressively “shorting” Ethereum with high leverage, a decision that has caused the trader to 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 price up 20% in 2 weeks

Despite facing significant losses from the forced liquidation of his shorts, the trader appears unfazed and continues to double down on shorts with high leverage without any worries.

Since mid-June 2023, the Ethereum price has been rising, gaining 20% ​​on the spot rate. Floating above the previous liquidation level of around $1,900, the coin is now trading at around $1,945. Although the buyers were unable to propel the spot rates further, the bulls are still in charge. The psychological price point of $2,000 is still an immediate resistance level, as well as the April 2023 high at $2,100.

Ethereum is marching higher, tracking the performance of bitcoin, driven mostly by fundamental activity and confidence from the wider cryptocurrency community. The direct correlation between bitcoin and ethereum prices vs the USD could benefit the bulls during the rally.

Comments from the United States Securities and Exchange Commission (SEC) alleging that some of the native currencies of some of Ethereum’s competitors, including Algorand, Cardano and Solana, are unregistered securities could provide a tailwind for ETH, leading to As such, its position can be strengthened. smart contract platform.

Representatives of the SEC, especially its chairman, Gary Gensler, have been reluctant to simply classify the status of ETH. Any clarification could push prices higher or force a selloff, depending on the agency’s classification.

Number of traders doubling on ETH shorts

Despite the steady rise in ETH over the past two weeks, records show that traders have been shorting ETH since it was around $1,700 at spot rates. However, traders started aggressively shorting ETH from June 26 onwards.

In total, the trader opened two positions. One with leverage of 19X was for $12 million, while the other with leverage of 7X was for $1 million. As prices rose, collateral representing $12 million was locked out of the 19X leveraged position. This did not prevent the trader from opening another position. According to their trading history, another short position was opened with a leverage of 30X with a stop at $1,999.

Whether or not ETH price will continue to rise in the coming weeks remains to be seen. It is clear from all that the price of the coin has remained stable defying sellers who were active from mid-April to the first half of June. In the medium term, the $2,000 and $2,100 liquidation levels are important price points that could shape the trajectory of ETH in the second half of 2023.

Feature image from Canva, chart from TradingView