Trader earns $1.1M on Ethereum short position with 50X leverage

A cryptocurrency trader earned $1.1 million from a short position on Ethereum (CRYPTO:ETH) within two days, leveraging 50X to capitalise on the market correction.

The trader opened the short position on December 24 when Ethereum was priced at $3,428, shorting 19,186 Ether, which was worth over $64.5 million.

While the position initially faced a loss of over $1.2 million, it later turned profitable, generating over $1.1 million in unrealised profits.

In addition to the profit, the trader also accumulated more than $680,000 in funding fees on the position.

The liquidation price for this position is set above $4,750, meaning the trader faces a high-risk threshold if Ethereum’s price increases significantly.

The trade highlights both the potential rewards and risks of leveraged trading, where profits are amplified but losses can be substantial.

As leveraged positions can magnify market movements, traders often face liquidation if prices move against their positions.

On December 26, data from blockchain analytics provider Hypurrscan revealed the details of this position, marking it as a significant trade within the ongoing crypto market trends.

The trader used borrowed funds to short Ether, betting on its price decline, a strategy common in leveraged trading.

However, the potential for high returns also comes with amplified risks, as seen in a similar situation in January 2024, where a trader lost over $161,000 after a leveraged position was liquidated.

Despite the risks, leveraged trading remains popular among crypto traders looking to maximise returns from market fluctuations.

As 2024 continues, high-profile trades, including those in meme tokens, demonstrate the volatile nature of the crypto market and the rewards and challenges of trading in it.

At the time of reporting, the Ethereum price was $3,342.27.