Ethereum Whale Faces Potential $118 Million Loss Despite ETH Price Surpassing $2,000
The price of Ethereum (ETH), the second-largest cryptocurrency by market capitalization, recently broke the $2,000 mark following the announcement of BlackRock’s registration of the iShares Ethereum Trust. This registration suggests that the world’s largest asset manager intends to launch a spot Ethereum exchange-traded fund (ETF) in the United States. However, despite the surge in price, an ETH whale is expected to incur a loss of $118 million on its investment.
The whale in question deposited 10,000 ETH, equivalent to $18.5 million, onto Binance, a leading cryptocurrency exchange. This deposit was made at a loss, as the whale had previously withdrawn 123,000 ETH, worth $451 million, from various exchanges at an average price of $3,672. The whale then proceeded to deposit 83,000 ETH, valued at over $186 million, onto exchanges at a price of $2,246. If the whale were to sell these tokens at market prices after depositing them, they would face a loss of approximately $118 million.
Despite this potential loss, the whale still holds $74 million worth of ETH in their wallet. It is speculated that they may be waiting for the listing of a spot Ethereum ETF before making their next move. Ethereum futures ETFs have been available for trading in the US since October of last year, but their trading volume has been relatively low.
A spot ETF, whether for Bitcoin or Ethereum, directly holds the respective cryptocurrency as its underlying asset. This means that the value of the ETF is closely tied to the current market price of the cryptocurrency, allowing investors to benefit from price appreciation without the need to personally buy, store, or manage the asset. Spot ETFs generally have lower fees compared to futures ETFs, as they do not incur costs related to rolling over futures contracts or hedging against price fluctuations. In contrast, futures ETFs invest in futures contracts, which are agreements to buy or sell the cryptocurrency at a predetermined price on a future date.
Please note that the views and opinions expressed in this article are for informational purposes only and should not be considered as financial or investment advice. Investing in or trading cryptoassets carries a risk of financial loss.