A Wake-up Call for an Ethereum Short Seller
Ethereum’s price trajectory is mirroring Bitcoin’s ascend, with a gain of 10.3% over the past week. This was spurred by BlackRock’s Bitcoin spot ETF filing with the US Securities and Exchange Commission, which took the market by surprise and invigorated altcoins. However, for a particular trader on the decentralized perpetual exchange GMX, the situation is more of a bad dream than good news.
The biggest short seller on GMX is employing a 6.64x leverage to short Ethereum (ETH) at an entry price of $1,703.97. An amount of $1.8 million of collateral is at risk for this anonymous trader. At the moment, the position has plummeted by 77.4%, equating to a loss of around $1.416 million.
As it currently stands, the trader’s short position, worth approximately $12 million in ETH, will face liquidation when the Ethereum price hits $1,945.18. As Chinese journalist Colin Wu reports, the account holder could be the owner of rebelvarma.lens.
How Can the Short Seller Evade Liquidation?
Analyst An Ape’s Prologue speculates that the ETH short seller may decide to double down on his bet. The general consensus is that the short position will face liquidation when ETH reaches $1945. However, there are limit orders which could add a total of $149,000 to the trader’s collateral within the $1935 and $1945 price range. If triggered, this could push the liquidation price to roughly $1967.
Additionally, the trader has about $224,000 worth of other assets diversified across Arbitrum and the Binance Smart Chain: $90,000 in USDT, $51,000 in USDC, $64,000 in WBTC, and $21,500 in AAVE.
It has been noted that the trader has previously evaded liquidation risk by moving tokens from other chains to Arbitrum as collateral. If ETH prices increase, it is likely the trader will follow a similar strategy. The $224k in available assets could be used to bolster the collateral in this scenario.
Will Ethereum Break the $2,000 Barrier?
Speculations are rife in the crypto sphere that the GMX short-seller’s liquidation could potentially trigger an ETH breakout above $2,000. The 1-hour price chart of Ether indicates that the price is currently lodged within the price range between $1,964 and $1,930. A significant movement to the upside or downside could dictate the next shift.
The 1-day chart shows that breaking out above $1,930 does not necessarily guarantee a push above $2,000. The 78.6% Fibonacci retracement level is situated at $1,975, where substantial resistance is expected. Ethereum bulls can only target the psychological $2,000 level if they manage to break past this price level.
