The post Crypto whale borrows $34 million for bullish leverage trading appeared on BitcoinEthereumNews.com.

A cryptocurrency whale made a complex leverage trading operation using Ethereum (ETH) as collateral to borrow $34 million in USDC. The borrowed amount landed in a Binance address, likely to invest in cryptocurrencies, which signals a bullish bias moving forward. According to a Lookonchain post on X, the whale withdrew 30,000 ETH from Bitifinex on June 30, worth $101.7 million. Right after, the address 0xEd0C deposited 20,000 ETH in two batches of 10,000 ETH to the Spark protocol. 0xEd0C6079229E2d407672a117c22b62064f4a4312 transaction history. Source: Etherscan Notably, this total deposit represents collateral with a nominal value of $67.8 million used to borrow 34 million DAI. DAI is a decentralized, over-collateralized stablecoin pegged at 1:1 to the U.S. dollar. The whale then used the $34 million worth of DAI to get the same amount of Circle USD (USDC) on the 1inch (1INCH) decentralized exchange, which 0xEd0C deposited to a Binance-controlled address. How does leverage trading work on DeFi? Overall, leverage trading in decentralized finance (DeFi) allows users to amplify their potential gains by borrowing funds without third-party exposure. Essentially, crypto traders deposit collateral, such as ETH, into a lending protocol like Spark. They then borrow against this collateral, often in stablecoins like DAI or USDC. This borrowed amount can be used to increase their trading position, potentially multiplying profits. However, leverage trading also magnifies risks. If the market moves against the trader’s position, they may face liquidation. Liquidation occurs when the value of the collateral falls below a certain threshold. The protocol then sells the collateral to repay the loan, potentially causing significant losses for the trader. In this case, the whale deposited 20,000 ETH as collateral to borrow $34 million. Lookonchain reported a health rate of 1.63 over this address’s position, considering a total deposit of 30,151 ETH ($102.33 million) for a $52…

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Filed under: News - @ June 30, 2024 3:12 pm