ETH/BTC exchange rate hits a new low since June 2022, dropping to 0.0492, causing a whale who went long on the exchange rate to be liquidated, losing approximately 3,870 ETH collateral.
(Previous summary:
Bitcoin breaks through $47,200, Ethereum approaches $2,350, causing liquidations of $270 million for 100,000 people.)
(Background information:
Standard Chartered Bank estimates Bitcoin spot ETF to attract “crazy” investments of £100 billion! BTC expected to rise to £200,000 in 2 years.)
Table of Contents:
ETH/BTC ratio hits new low in June 2022
Lessons from going long on ETH/BTC
Whale gets liquidated
With the launch of Bitcoin spot ETF seemingly imminent, the price of Bitcoin surged past $47,200 this morning, reaching a new high in 21 months, with a 6.3% increase in the past 24 hours, driving the entire cryptocurrency market into a state of general growth.
However, it is worth noting that Ethereum’s performance this morning, although similar to Bitcoin, appears weaker. The ETH/BTC exchange rate dropped below 0.05 today and was temporarily reported at 0.0492 at the time of writing, reaching its lowest point since mid-June 2022.
Source: TradingView
As the two cryptocurrencies with the largest market capitalization in the cryptocurrency market, Bitcoin and Ethereum, ETH usually shows more strength than BTC. However, since the launch of spot ETFs, the halving, and the rise of the Bitcoin ecosystem, Ethereum has appeared weaker since September last year.
In response to this, @0xjd_eth, who has over 13,000 followers, shared his reflections today on X when the ETH/BTC exchange rate was 0.06 and he converted a large portion of his positions from Bitcoin to Ethereum. He raised the following points for self-reflection:
Underestimating the Bitcoin ecosystem: At the time, he believed that the UTXO model limited Bitcoin’s development potential and only considered it as digital gold, ignoring the potential development of the Bitcoin ecosystem.
Excessive confidence in Ethereum: Despite demonstrating a strong ecosystem and network effects after transitioning to the Proof of Stake mechanism, he overlooked the possibility of competition from other L1s against ETH.
Blind spots in exchange rate analysis: At the time, he believed that the ETH/BTC exchange rate at 0.06 was relatively safe and expected it to reach 0.1, but failed to anticipate the risk of it dropping to 0.05 in the short term.
He added that he would not take any action for now but continue to observe market dynamics, especially considering the possibility of Bitcoin ETF approval, which could lead to the approval of an Ethereum ETF in May. This would be a good opportunity for him to convert his Bitcoin positions back into Ethereum. Nevertheless, he still believes that Ethereum is currently undervalued.
In addition, on-chain data analyst Yu Yin stated that a whale who has been going long on the ETH/BTC exchange rate since March last year was recently liquidated due to a further decline in the rate, causing their loan health to drop below 1 and triggering automatic liquidation. The whale was liquidated for 3,870.79 ETH collateral (worth approximately $8.924 million) in Aave V2 to repay a loan of 183 WBTC.
Within the past four hours, the whale exchanged 1,590.8 ETH for 78.45 WBTC to partially repay the loan, aiming to raise their loan health to 1.02 and reduce the risk of liquidation. However, with a loan health of 1.02, there is still a high-risk situation, and additional liquidations may be triggered at any time due to further price fluctuations. The whale currently has approximately 1,202 WBTC in loans.
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