A prominent cryptocurrency investor, who emerged two months ago with approximately $11 billion in Bitcoin, has initiated nearly $900 million in short positions against Bitcoin and Ether, indicating expectations of a market downturn despite the prevalent optimism for October.
The investor made a return to trading on Thursday with a $360 million Bitcoin (BTC) transfer that drew the attention of cryptocurrency traders, as reported by Cointelegraph.
On Friday, the investor established a $600 million 8x leveraged short position on Bitcoin and a leveraged short exceeding $300 million on Ether (ETH), according to blockchain data from Onchain Lens.
These substantial short positions indicate the investor’s belief in an imminent market correction, although this expectation could be undermined if Bitcoin’s price rises beyond $133,760, their liquidation threshold.
The investor also opened a $330 million position on Ether with 12x leverage, having a liquidation price of $4,613. This position reflected an unrealized profit of $2.6 million at the time of writing, according to blockchain data shared by Lookonchain on Friday.
The investor’s short positions might encourage other significant investors to follow suit and bet on the price decline of leading cryptocurrencies.
In August, nine whale addresses collectively acquired $456 million worth of Ether, after the $11 billion Bitcoin investor converted $5 billion of Bitcoin into ETH.
Large-scale selling from previously inactive Bitcoin whales was identified as one of the primary factors suppressing Bitcoin’s price action in August, according to analyst and early Bitcoin adopter Willy Woo.
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Bitcoin correction caused by smaller cohorts, not whales
Bitcoin reached a new all-time high of over $125,700 on Sunday, before falling back to trade above $121,350 at the time of writing, according to Cointelegraph data.
The majority of the selling pressure did not originate from large investors but from smaller wallet cohorts, including 603 Bitcoin sold by shrimp addresses, 2,260 Bitcoin sold by crabs, and 3,860 BTC sold by fish addresses, as noted by blockchain insights platform CryptoQuant’s Thursday X post.
The shrimp cohort refers to retail investor addresses holding less than 1 Bitcoin. Crab addresses contain up to 10 Bitcoin, while fish addresses hold between 50 to 100 BTC.
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Most cryptocurrency traders are also positioning for a short-term downturn in the crypto market.
Over 52% of Bitcoin holders on all exchanges are currently in short positions, betting on a decline in Bitcoin’s price, while 47% are still long, according to blockchain data from CoinAnk.
Approximately 51% of Ether traders have also shorted the second-largest cryptocurrency, anticipating a drop.
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