Crypto Whale Profits $4.4M After Adding $5M to Avoid Liquidation

A prominent crypto trader, known for their successful trades, recently opened a substantial short position on Bitcoin (BTC), worth approximately $332 million. The trader utilized significant leverage, reaching up to 40x, to build a short position of 3,940 BTC. Short-selling involves borrowing an asset to sell it at a higher price, with the intention of buying it back at a lower price to profit from the difference.

Initially, the trader faced unrealized losses exceeding $1 million. The entry price for the short position was $84,040.8, with a liquidation price set at $85,300. Despite these challenges, the trader managed to avoid liquidation by adding $5 million worth of the stablecoin USDC to their account. This strategic move allowed the trader to increase their position and continue shorting BTC.

The trader's actions did not go unnoticed. A group of traders attempted to drive up the price of Bitcoin to liquidate the whale's position. However, the whale's timely addition of funds helped them escape liquidation. Currently, the trader holds a position of 5,406 BTC, valued at $449 million, with an unrealized profit of $4.4 million. The trader is profiting from closing positions through the time-weighted average price (TWAP) method.

When trading with leverage, users can add more funds to their accounts to increase their collateral and move their liquidation price further away from their entry price. While this reduces the risk of liquidation, it also increases the potential for greater losses if the asset's price moves against the trader's position. Lookonchain has been monitoring this trader, noting a 100% hit rate in one month, resulting in profits of $16.39 million.

This event highlights the strategic maneuvers and risks involved in high-stakes crypto trading. The trader's ability to navigate market volatility and external pressures demonstrates a high level of skill and risk management. The use of leverage and stablecoins to mitigate risks and maximize profits is a common strategy among experienced traders. However, it also underscores the importance of thorough analysis and timely decision-making in the volatile crypto market.