A prominent early investor in Bitcoin is currently enduring significant unrealized losses as cryptocurrency prices decline and leverage starts to reverse.
Summary
- An early Bitcoin investor is experiencing approximately $54 million in unrealized losses on substantial long positions in BTC, ETH, and SOL.
- This downturn arises as crypto markets weaken, liquidations soar, and fear levels intensify.
- Experts continue to caution that high leverage presents risks during times of macroeconomic and policy uncertainty.
The information was released on Dec. 16 by the on-chain analytics platform Onchain Lens. As per the analysis, the account commonly dubbed a “Bitcoin OG” is currently dealing with an unrealized loss of around $54 million in significant long holdings of Bitcoin, Ethereum, and Solana.
The trader had previously seen gains exceeding $119 million, but those profits have since dwindled to roughly $50 million as market conditions deteriorated.
Large long positions under pressure
The wallet holds long positions with a total notional value of about $674 million. The largest exposure is in Ethereum, with an average entry price near $3,167 and approximately 190,900 ETH, amounting to nearly $563 million.
Furthermore, the account possesses 250,000 SOL, valued around $31.5 million, entered at approximately $137, and 1,000 BTC, worth about $86 million, entered around $91,500.
All positions are entirely long, with no shorts to hedge. Given that the margin usage ratio is approximately 75%, there’s little margin for error if prices continue to fall.
While there are no current signs of forced liquidations, the drawdown highlights how quickly market conditions can shift when high leverage is at play.
Market slide fuels losses
The losses coincide with a sharp downturn in the overall crypto market. Bitcoin slid towards the $85,000 range, while Ethereum dipped below $3,000 and Solana tumbled to around $126. The total crypto market capitalization dropped roughly 5% to about $3.05 trillion.
Liquidations surged by 126% from the previous day, reaching $649 million, according to CoinGlass derivatives data, signifying increasing pressure on leveraged traders. Concurrently, the Crypto Fear & Greed Index sank to 11, reflecting deep-seated risk aversion.
Market anxieties have been heightened by macroeconomic issues, such as uncertainties surrounding U.S. monetary policy and rising caution regarding risk assets. Several analysts have alerted that high leverage poses significant dangers in this landscape, even for seasoned traders.
Fundstrat chairman Tom Lee remarked in a recent post on X that assets like Bitcoin and Ethereum remain highly vulnerable to fluctuations in risk perception. However, he considers sharp declines as opportunities for long-term accumulation rather than advocating for aggressive leverage. His perspective aligns with a growing trend among market participants towards caution, as volatility continues to impact crowded positions.
For the moment, the Bitcoin OG’s positions remain open, but this experience serves as a potent reminder of the inherent risks associated with high leverage.
