Trader Pockets $16 Million Betting on Ethereum's Fall

Ethereum (ETH) drops drastically to $3000 and despite that, some traders still manage to profit from this downward trend. This is the case of a savvy investor, who thus realized nearly $16 million in gains by betting against the crypto! Could it be that ethereum is more profitable during downturns?

Crypto: A trader earns $16 million by betting on the decline of ethereum

Short selling is a trading strategy that involves borrowing a crypto asset, selling it at the current price, and then buying it back later at a lower price to make a profit. According to the data, a trader used this technique and opened a short position with a leverage effect of 50x when ETH was trading at $3,388.

With a liquidation threshold set at $4,645, the trader saw his position profit when the price of ETH fell to around $3,091. This allowed him to generate an unrealized profit of $15.7 million! In addition to his gains from the decline of ETH, the investor pocketed an additional $2.3 million in financing fees. These fees are paid by crypto traders who hold long positions to traders who hold short positions, according to the financing mechanism of the futures markets.

In December 2024, another trader managed to generate $1.1 million in just 48 hours by using a short position on ethereum. By betting on the decline of ETH, he was able to profit from the volatility, once again illustrating the opportunities of leveraged trading.

Could ETH therefore be more profitable during downturns?

While some traders manage to make huge profits by betting on the drop of ethereum, this might lead one to think that ETH would be more profitable during downturns. But that’s not really the case, as it all depends on the strategy used by each trader, whether in bullish or bearish periods. Especially since these gains rely on risky strategies and poor management of crypto volatility could lead to the total liquidation of invested funds.

As the crypto market continues to fluctuate, some investors manage to take advantage of these movements to their benefit. However, these spectacular gains should not overshadow the considerable risks associated with certain trading techniques.