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Ethereum price has followed that of Bitcoin and has seen a 10.3% increase in price in the last seven days. The news of BlackRock filing a bitcoin spot ETF with the US Securities and Exchange Commission took the entire market by surprise and at the same time breathed new life into altcoins. However, for traders on the decentralized perpetual exchange GMX, this news is not really good news, but rather a nightmare.
Ethereum short seller getting rect?
The largest short seller on GMX is using 6.64x leverage to short Ether (ETH) at an entry price of $1,703.97. A total of $1.8 million in collateral is at stake for the unknown trader. As of press time, the total position was down 77.4% to $1.416 million.
As the position stands, the trader’s short position of approximately $12 million in ETH would be liquidated once the Ethereum price reaches $1,945.18. according to a reports According to Chinese journalist Colin Wu, it may be the owner of rebelwarma.lens.
As a prelude to the popular analyst N.A.P. guessedETH short sellers can even double down on their bets. As the analyst writes, the consensus holds that the short position will be liquidated when ETH reaches $1945. However, there are limit orders that 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 around $1967.
The analyst chart below shows how the liquidation value of ETH changes with price movements. The liquidation price remains at $1945 until Ethereum reaches $1935, but limit orders are triggered when ETH enters the range between $1935 and $1945, pushing the liquidation price up to $1967.
In addition, the analyst says that the addresses have about $224,000 worth of other assets spread across Arbitrum and Binance Smart Chain: $90,000 in USDT, $51,000 in USDC, $64,000 in WBTC and $21,500 in AAVE.
“With a history of mitigating liquidation risk by adding tokens from other chains to Arbitrum for collateral, we will probably see a similar strategy if ETH prices rise. In this scenario the $224k in available assets can be used to raise collateral,” says the analyst.
If ETH short sellers use all their holdings and keep them as collateral, the maximum liquidation price could rise to around $2,000, representing an additional value increase of 6.5% from the current price. Hence, Twitter user @apes_prologue concluded:
Although their position appears risky, the threat of liquidation is not as imminent as is commonly believed, as they have mechanisms in place to protect their positions. Additionally, it is possible that he has secured positions in other markets that we are unaware of.
ETH on the verge of breaking above $2,000?
Rumors are circulating in the crypto community that the liquidation of GMX short-sellers could lead to a breakout above $2,000 in ETH. Ether’s 1-hour chart shows that the price is currently stuck in a price range between $1,964 and $1,930. A breakout to the upside or downside can be decisive for the next move.
A look at the 1-day chart shows that a breakout above $1,930 does not necessarily mean a follow-through above $2,000. The 78.6% Fibonacci retracement level is at $1,975, where a major resistance is expected. Ethereum bulls can only target the psychologically important $2,000 level if they break above this price level.
Featured Image from iStock, Chart from Tradingview.com
