Large cryptocurrency whales continuously add capital to the trading platform to avoid liquidating their short positions in ETH worth tens of millions of dollars.
By injecting an additional $9.5 million USDC in the past two days, this whale is trying to maintain the $66.4 million ETH short position with 20x leverage despite an estimated loss of nearly $20 million on paper.
MAIN CONTENT
Cryptocurrency whales maintain a $66.4 million ETH short position with 20x leverage.
Continuously injecting capital into HyperLiquid to avoid position liquidation.
What are cryptocurrency whales doing to avoid liquidating their large ETH short position?
Cryptocurrency whales have continuously added capital to the HyperLiquid trading platform to avoid the liquidation of their $66.4 million ETH short position. This comes amidst pressures of losses nearing $20 million on paper due to Ethereum's price volatility.
This short position is executed with 20x leverage, meaning the initial margin capital is much lower than the total transaction value, making it crucial to maintain wallet balance to avoid automatic liquidation when market prices are unfavorable.
Why do whales endure unrealized losses and continue to maintain high-leverage ETH short positions?
High-leverage short positions can yield significant profits but also carry serious risks and losses if the market moves against expectations. This cryptocurrency whale is facing an approximate loss of $19.9 million on paper due to a sharp increase in ETH prices after establishing their position.
The continuous injection of $9.5 million USDC shows that the whale's strategy is to maintain the position despite short-term losses, expecting the market to reverse in the future to make the short position profitable.
"Managing a high-leverage short position requires careful consideration of liquidity and risk management, especially in a highly volatile cryptocurrency market."
Cryptocurrency market analyst, 2024
What could happen next with this whale's short position?
If ETH prices continue to rise, the short position is likely to face liquidation pressure or require the whale to continue injecting capital to maintain it. Conversely, if the market reverses downwards, estimated losses will shrink, and the position could yield significant profits.
The cryptocurrency market is always highly volatile, especially with leveraged positions, so the continuous capital injections by the whale indicate strategic thinking and experience in risk and capital management.
Lessons learned from managing leveraged positions in cryptocurrency?
It is important to prepare backup capital to avoid automatic liquidation when the market is unfavorable. High leverage, while attractive, also increases the risk of quickly losing capital in a highly volatile market.
In addition, monitoring market sentiment, price volatility, and applying risk management strategies like setting stop loss and reasonable asset allocation are crucial to limit losses and optimize profits.
Frequently Asked Questions
Who are cryptocurrency whales?
Cryptocurrency whales are individuals or organizations that own a large amount of cryptocurrency, which can significantly impact the market when trading.
What is the difference between unrealized loss and realized loss?
Unrealized loss is a loss that has not been closed due to market price fluctuations, while a realized loss occurs when the position is closed at a price lower than the purchase price.
Why is high leverage risky in cryptocurrency trading?
High leverage can amplify profits but also magnify losses, easily leading to rapid liquidation if prices move against the trend.
What is HyperLiquid in cryptocurrency trading?
HyperLiquid is a trading platform that allows manipulation of derivative positions with leverage features and advanced risk management.
How to avoid liquidation of leveraged positions?
Maintaining sufficient margin capital, using stop loss, closely monitoring price fluctuations, and adding capital when needed helps avoid liquidation of leveraged positions.
Source: https://tintucbitcoin.com/ca-voi-eth-lo-gan-20-trieu-usd/
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