$ETH what if the prices of ETH hit ATH (All Time High), that is $4891.70 and it starts to dump and 150000 people do short for it, investing 10 dollars each at 50x leverage. what could be its new price.
To estimate the new price of Ethereum if 150,000 people short it with \$10 each at 50x leverage, we need to consider a few things:
1. **Total capital being used for shorting**:
Each person is investing \$10 with 50x leverage, so the actual capital they control in the market is:
$$
\text{Total position per person} = 10 \times 50 = 500 \text{ dollars}.
$$
Since there are 150,000 people:
$$
\text{Total capital used for shorting} = 150,000 \times 500 = 75,000,000 \text{ dollars}.
$$
2. **Shorting pressure**:
When people short an asset, they're betting on its price dropping. If the price of Ethereum starts to fall, their positions would be "in profit," encouraging them to keep shorting, potentially leading to a cascading effect.
3. **Impact of \$75 million in short positions**:
To estimate how this could impact the price, we need to compare it to the overall market capitalization and trading volume. Ethereum's market cap and volume are dynamic, but at its ATH of \$4,891.70, the market cap of Ethereum was roughly:
$$
\text{Market Cap} = \text{Price} \times \text{Circulating Supply} \approx 4,891.70 \times 120,000,000 \text{ (approximate supply at ATH)} = 587,004,000,000 \text{ dollars}.
$$
4. **Price impact estimation**:
To get a rough idea of how much \$75 million in short positions could move the market, we can use a basic formula:
$$
\text{Price Impact} = \frac{\text{Short Pressure}}{\text{Market Cap}} \times \text{Price}
$$
Plugging in the numbers:
$$
\text{Price Impact} = \frac{75,000,000}{587,004,000,000} \times 4891.70 \approx 0.63 \text{ dollars}.
$$
So, based on this simplified calculation, the price could drop by **around \$0.63** per unit due to \$75 million in shorting pressure, which is relatively small compared to the overall market.
However, in reality, other factors like market liquidity, whale actions, buy walls, and market sentiment could cause the price to drop much more sharply if a panic selling or cascading liquidations occur, especially when people start closing their positions. In extreme cases, this could lead to large price swings.
### Hypothetical New Price Estimate:
If Ethereum were to hit its ATH of \$4891.70 and start dumping under these conditions, the price could initially dip by the \$0.63 estimated, so the new price might be:
$$
\text{New Price} \approx 4891.70 - 0.63 = 4891.07 \text{ dollars}.
$$
However, this is a rough estimate through mathematics, and depending on market dynamics, but in real prices could dump upto 2100 dollars.
