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A cryptocurrency trader was able to cash in over $38.8 million by shorting Ethereum (ETH) as it crashed.
The trader in question earned $38.8 million of unrealized profit on a heavily leveraged position shorting Ethereum.
Leverage is a way to gain more exposure than your capital allows, acting as a multiplier for losses and gains on a position. Short positions—often referred to as shorting or going short—are trades that profit from the price of the underlying asset falling instead of rising.
The details
According to Hypurrscan data, the trade used 50x leverage and was opened when Ethereum was changing hands at $3,388. The trader also earned $2.3 million in funding fees on their leveraged position.
The Ethereum price fell by more than 4% in 24 hours on Feb. 2, reaching just over $3,100. At the time of writing, it had continued to fall until it reached its current value of under $2,700 after losing about 11.6% over the last 24 hours.
Aurelie Barthere, principal research analyst at Nansen recently told industry news outlet Cointelegraph that Ethereum needs more actual usage to regain value. She said:
“Other layer-1s are catching up with Ethereum regarding apps, use cases, fees and amount staked.”
Still, she suggested that the current government may help with that issue. She specifically pointed at Elon Musk and his Department of Government Efficiency (DOGE):
“Musk’s DOGE cost-saving governmental organization has been rumored to have met public blockchain representatives for a potential on-chain expense-tracking and management.”
The news follows Vitalik Buterin — the co-founder of Ethereum (ETH), the blockchain that introduced smart contracts — announcing changes to Ethereum Foundation’s leadership last month. He wrote:
“We are indeed currently in the process of large changes to EF leadership structure, which has been ongoing for close to a year. Some of this has already been executed on and made public, and some is still in progress.”
