Ethereum (ETH) drops drastically to $ 3,000 and despite this, some traders still succeed in taking advantage of this downward trend. This is the case of a wise investor, who thus made nearly $ 16 million in gains by betting against the crypto! Like what, Ethereum would be more profitable during periods of decline?
Crypto: a trader wins $ 16 million by focusing on the drop in Ethereum
The uncovered sale is a trading strategy which consists in borrowing an asset crypto, selling it at the current price, then buying it later at a lower price in order to achieve a profit. So according to the data, a trader used this technique, and opened a short position with a lever effect of 50x when the ETH was exchanged at $ 3,388.
With a liquidation threshold set at $ 4,645, the trader therefore saw its position fruit when the price of the ETH dropped to around $ 3,091. This allowed him to generate an unable profit of $ 15.7 million ! In addition to his earnings on the drop in the ETH, the investor pocketed an additional $ 2.3 million in the form of financing costs. These costs are paid by Crypto traders which hold long positions to traders which hold short positions, according to the financing mechanism of the term markets.
In December 2024, another trader managed to generate $ 1.1 million in just 48 hours using a short position on Ethereum. By betting on the drop in ETH, he was able to take advantage of volatility, once again illustrating the opportunities of leverage trading.
Eth would eth be more profitable during periods of decline?
If some traders manage to make huge profits by betting on the drop in Ethereum, it might suggest that ETH would be more profitable during the drop. But this is not really the case, because it all depends on the strategy used by each trader, whether in a bullish or downward period. Especially since these gains are based on risky strategies and mismanagement of crypto volatility could lead to the total liquidation of the funds invested.
While the Crypto market continues to fluctuate, some investors manage to take advantage of these movements to their advantage. However, these spectacular gains should not make us forget the considerable risks associated with certain trading techniques.
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