ETH/BTC exchange rate hits a new low since June 2022, dropping to 0.0492, causing a whale who was 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, and 100,000 people get liquidated for $270 million.)
(Background:
Standard Chartered Bank estimates Bitcoin spot ETF to attract “crazy” $100 billion investment! BTC expected to rise to £200,000 in 2 years.)
Table of Contents:
ETH/BTC ratio hits new low in June 2022
Lessons learned from longing ETH/BTC
Whale gets liquidated
With the launch of the Bitcoin spot ETF seemingly imminent, the price of Bitcoin surged to over $47,200 this morning (9th), reaching a new high in 21 months and showing a general upward trend in the cryptocurrency market with a 6.3% increase in the past 24 hours.
However, it is worth noting that Ethereum’s performance this morning (9th) was relatively weaker compared to Bitcoin. The ETH/BTC exchange rate dropped below 0.05 today and was reported at 0.0492 at the time of writing, reaching its lowest point since mid-June 2022.
Source: TradingView
As the largest cryptocurrencies in the market, Bitcoin and Ethereum, ETH is usually stronger than BTC. However, since the launch of spot ETFs, halving, and the rise of the Bitcoin ecosystem, Ethereum has appeared weaker after September last year.
In response to this, @0xjd_eth, who has over 13,000 followers, shared his reflections on Twitter today, when the ETH/BTC exchange rate was 0.06 and he converted a large position from Bitcoin to Ethereum. He pointed out several points of self-reflection:
Underestimating the Bitcoin ecosystem: At the time, he believed that the UTXO model limited the development potential of Bitcoin and only viewed it as digital gold, ignoring the development potential of the Bitcoin ecosystem.
Excessive confidence in Ethereum: Although Ethereum has demonstrated a strong ecosystem and network effects after transitioning to the Proof of Stake mechanism, he overlooked the possibility of competition from other Layer 1 solutions against ETH.
Blind spots in exchange rate analysis: He believed that an ETH/BTC exchange rate of 0.06 was relatively safe at the time 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 will not take any action for now and will continue to observe the market dynamics, especially considering the possibility of a Bitcoin ETF being approved, which may lead to an Ethereum ETF being approved in May. This could be an opportunity for him to convert his Bitcoin position to Ethereum again. However, he still believes that Ethereum is currently undervalued.
In addition, on-chain data analyst Yu Yin stated that a whale who had been longing the ETH/BTC exchange rate since March last year was recently liquidated due to a further drop in the rate, causing their loan health to fall below 1 and triggering an automatic liquidation mechanism. The whale was liquidated for 3,870.79 ETH collateral (worth approximately $8.924 million) in Aave V2 to repay the loan of 183 WBTC.
Within the past four hours, the whale has exchanged 1,590.8 ETH for 78.45 WBTC to partially repay the loan and improve their loan health to 1.02 to reduce the risk of liquidation. However, 1.02 still represents a high-risk state and could trigger additional liquidation at any time due to further price volatility. The whale currently has approximately 1,202 WBTC in loans.
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