A significant player in the cryptocurrency market, previously identified as holding approximately $11 billion in Bitcoin, has recently established substantial short positions totaling nearly $900 million against both Bitcoin and Ether. This strategic move suggests a bearish outlook on the immediate future of these leading digital assets, despite prevailing optimism around the anticipated “Uptober” trading period. The investor’s actions, executed with high leverage, indicate a strong conviction in an impending market correction, positioning them to profit from a decline in prices.
The prominent investor, who re-emerged in trading activities recently, initiated a $600 million short on Bitcoin using an 8x leveraged position on the decentralized exchange Hyperliquid. Simultaneously, a short position exceeding $300 million was opened for Ether, leveraging it 12 times. The Bitcoin position has a liquidation threshold of approximately $133,760. A modest price decrease for Bitcoin could yield substantial profits, while a rise above this level would result in the immediate liquidation of the margin. The Ether position, with a liquidation price of $4,613, is currently showing a small unrealized profit.
These substantial short bets by a major market participant are generating considerable attention within the crypto community. While some interpret this as a calculated anticipation of a natural market pullback following recent gains, others speculate it could be a deliberate psychological maneuver aimed at inducing selling pressure from smaller traders. Such a move could potentially precipitate the very decline the whale is betting on, influencing other large investors to adopt similar bearish strategies. This development contrasts with earlier reports where this same whale had reportedly shifted $5 billion from Bitcoin into Ether in August, a period when large-scale selling from dormant Bitcoin holders was noted by analysts like Willy Woo as a factor limiting Bitcoin’s price ascent.
The sentiment of expecting a short-term decline appears to be shared by a broader segment of the market. Data indicates that over 52% of Bitcoin holders across exchanges are currently positioned for a price decrease, with a similar trend observed for Ether traders, where approximately 51% have established short positions. This collective bearish positioning suggests a widespread expectation of a temporary downturn in the cryptocurrency market.
Market volatility has increased for both Bitcoin and Ether, potentially influenced by expectations of further Federal Reserve rate adjustments later in the month. While market participants are pricing in a high probability of a 25-basis point rate cut by the Fed at their upcoming meeting, ongoing economic uncertainties, including the government shutdown’s impact on data releases, contribute to market choppiness. Bitcoin has experienced sharp price swings, recently recovering after a notable dip. Ethereum has also seen a slight decline over the past day and week. Notably, US spot Ethereum ETFs experienced net outflows recently, breaking a streak of consistent inflows, although institutional interest remains robust overall, with substantial net inflows observed earlier in October. This ebb and flow indicates a dynamic market where investor sentiment and macroeconomic factors are closely intertwined.
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