The price of Ethereum has increased by 10.3% over the past week, following the lead of Bitcoin. The market received a surprise boost when news broke about BlackRock’s filing of a Bitcoin spot ETF with the US Securities and Exchange Commission. While this news has given new life to altcoins, it has turned into a nightmare for one trader on the decentralized perpetual exchange GMX.
The largest short seller on GMX has leveraged 6.64x to short Ether (ETH) at an entry price of $1,703.97. This anonymous trader has put $1.8 million of collateral at stake, and as of now, their position is down 77.4% for a total loss of -$1.416 million.
If the Ethereum price reaches $1,945.18, the trader’s short position will be liquidated, putting about $12 million in ETH at risk. Speculation suggests that the owner of rebelvarma.lens could be behind this short position, as reported by Chinese journalist Colin Wu.
There is even speculation that the ETH short seller might double down on their bet. If there are limit orders triggered within the $1935 and $1945 price range, adding $149,000 to the trader’s collateral, the liquidation price could increase to around $1967. An Ape’s Prologue, a popular analyst, shared a chart illustrating how the liquidation price changes with ETH price swings, emphasizing the potential for higher liquidation prices.
The short seller’s address also holds about $224,000 worth of other assets on Arbitrum and the Binance Smart Chain, including USDT, USDC, WBTC, and AAVE. The analyst speculates that if ETH prices increase, the short seller may use these assets to top up collateral, potentially pushing the maximum liquidation price even higher, to around $2,000.
While the short seller’s position appears risky, it may not be as imminent as believed due to mechanisms available to protect their position. Additionally, there is a possibility that the short seller has hedged their position in other markets.
Rumors are circulating within the crypto community that the potential liquidation of the GMX short seller could trigger a breakout of ETH above $2,000. However, the 1-hour chart of Ether shows that the price is currently trading within a range between $1,964 and $1,930. A breakout above or below this range could determine the next move for Ethereum.
Analyzing the 1-day chart, it becomes apparent that a breakout above $1,930 does not necessarily guarantee a move above $2,000. Significant resistance is expected at the 78.6% Fibonacci retracement level of $1,975. Only if Ethereum bulls can successfully break out above this price level will they be able to target the psychologically important $2,000 mark.
It remains to be seen how the situation will unfold for the ETH short seller on GMX and whether the liquidation event will have an impact on Ethereum’s price. Traders and investors will be closely monitoring the market to assess the potential outcomes and adjust their strategies accordingly.
