The Ethereum price has followed Bitcoin’s lead and has seen a 10.3% price increase over the past seven days. News of BlackRock’s Bitcoin spot ETF filing with the US Securities and Exchange Commission took the entire market by surprise and also breathed new life into altcoins. For one trader on the decentralized perpetual exchange GMX, however, the news is not really good news, but rather a nightmare.

Ethereum Short Seller Getting Rekt?

The largest short seller on GMX is using 6.64x leverage to short Ether (ETH) at an entry price of $1,703.97. A total of $1.8 million of collateral is at stake for the anonymous trader. At press time, the position was down 77.4% for a total of -$1.416 million.

As it stands, the trader’s short position of about $12 million in ETH will be liquidated when the Ethereum price reaches $1,945.18. According to a report from Chinese journalist Colin Wu, it could be the owner of rebelvarma.lens.

As popular analyst An Ape’s Prologue speculates, the ETH short seller could even double down on his bet. As the analyst writes, the consensus assumes that the short position will be liquidated when ETH reaches $1945. However, there are limit orders that could add a total of $149,000 to the trader’s collateral within the $1935 and $1945 price range. If triggered, this could increase the liquidation price to around $1967.

The analyst’s chart below shows how his liquidation price changes with ETH price swings. Until Ethereum reaches $1935, the liquidation price remains at $1945, but limit orders are triggered when ETH enters the $1935 and $1945 range, increasing the liquidation price to $1967.

In addition, the analyst notes that the address holds about $224,000 worth of other assets spread across Arbitrum and the Binance Smart Chain: $90,000 in USDT, $51,000 in USDC, $64,000 in WBTC and $21,500 in AAVE.

“With a history of mitigating liquidation risk by bridging tokens from other chains to Arbitrum for collateral, we’ll probably see a similar strategy if ETH prices increase. The $224k in available assets could be used to top up collateral in this scenario,” the analyst notes.

If the ETH short seller uses up all of its assets and puts them up as collateral, the maximum liquidation price could rise to around $2,000, representing a further 6.5% price increase from the current price. Hence, Twitter user @apes_prologue concludes:

While his position appears risky, the danger of liquidation is not as imminent as popularly believed, as he has mechanisms at his disposal to protect his position. Additionally, it is also possible he could have hedged his position in other markets that we are unaware of.

ETH On The Verge Of Breaking Above $2,000?

Rumors are circulating in the crypto community that the liquidation of the GMX short-seller could trigger a breakout of ETH above $2,000. The 1-hour chart of Ether shows that the price is currently stuck in the price range between $1,964 and $1,930 for the moment. A breakout to the upside or downside could be decisive for the next move.

A look at the 1-day chart reveals that a breakout above $1,930 does not necessarily mean a follow-through to above $2,000. The 78.6% Fibonacci retracement level is at $1,975, where major resistance is expected. Ethereum bulls can only target the psychologically important $2,000 level if they break out above this price level.

Featured image from iStock, chart from TradingView.com