Trader invests $118 million in bet that Bitcoin will outperform Ether
A trader significantly increased a bet by nearly $21 million on Bitcoin outperforming Ethereum, raising the total position size to $118 million. By leveraging wBTC and borrowing Ether through Aave, the trader’s position benefits from decreases in Ether’s value compared to Bitcoin, indicating a pessimistic stance on Ethereum. The trader may also be utilizing the borrowed Ether for various purposes such as asset speculation, hedging, or interest earnings.
The trade, facilitated through the DeFi platform Aave, added almost $21 million to a short position favoring Bitcoin over Ethereum. This action on April 3 resulted in a total position value of $118 million. Aave is a decentralized lending protocol that permits users to deposit one cryptocurrency and borrow another in return.
According to Llamafolio, a wallet tracking tool, the trader currently has 2,648 wBTC deposited (equivalent to around $180 million) and is borrowing 35,894 Ether (about $118 million). The wallet belongs to Multicoin Capital, as identified by Nansen, a blockchain analytics platform.
The strategy of depositing wBTC and borrowing Ether against it essentially represents a bearish position on Ether in relation to Bitcoin. If Ether’s value declines relative to Bitcoin, the trader can repay the borrowed Ether at a lower valuation, resulting in gains. As of April 3, Ether has decreased by 3% in comparison to Bitcoin, validating the trader’s position.
The position’s health factor, indicating the risk of liquidation, currently stands at 1.19, considered low-risk. Liquidation is triggered if the health factor falls to 1, leading to the platform’s solvency. The trader’s actions could also involve speculation on other assets, risk hedging, interest accrual, or protocol rewards.
All the Ether borrowed was transferred to centralized exchange Coinbase to conceal the trade. Ryan Celaj, a data correspondent at DL News, invites tips via email at ryan@dlnews.com.
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