A significant player in the Bitcoin market has recently closed more than $500 million in short positions, predicting a downturn in Bitcoin’s value just before the eagerly anticipated Federal Open Market Committee (FOMC) meeting scheduled for this week.
This notable investor, often referred to as a “whale,” secured nearly $10 million in profit after liquidating a short position leveraged at 40 times for 6,210 Bitcoin (BTC), amounting to over $516 million. This move essentially signifies a wager on a decrease in Bitcoin’s price.
Leveraged positions involve the use of borrowed funds to amplify an investment’s size, which can lead to both higher returns and greater risks compared to traditional investment strategies.
The astute whale closed all his short positions within mere hours, capitalizing on a $9.46 million profit due to Bitcoin’s decline, as indicated by data from tracking platforms.
The whale initiated the original $368 million position at a price of $84,043 and faced potential liquidation if Bitcoin surpassed $85,592. Despite the added challenge of needing to inject an additional $5 million into the short position, the whale managed to profit when another group of traders attempted to capitalize on the liquidation but ultimately failed.
Following the closure of his Bitcoin shorts, the whale shifted his focus to accumulating Ethereum (ETH) with the earnings, purchasing over 3,200 ETH for more than $6.1 million shortly after on March 18.
This decision to realize profits comes just one day ahead of the FOMC meeting on March 19, which is expected to provide market participants with key insights into the Federal Reserve’s future monetary policy, likely affecting investor interest in risk assets such as Bitcoin.
Concerns regarding inflation appear to be abating following the announcement of February’s US Consumer Price Index (CPI), which showed a year-on-year increase of 2.8%, slightly below the anticipated 2.9%. This easing of inflation worries is viewed positively in the context of the upcoming FOMC meeting, according to a notable figure in the research community.
The lower CPI figures may hint at a favorable trajectory for Bitcoin as well, indicating that inflationary pressures may gradually be diminishing, which could affect the Federal Reserve’s decisions regarding monetary policy.
The short-term price movement of Bitcoin will likely hinge on its ability to maintain the $81,000 support level, as prevailing sentiment may stabilize if this threshold holds firm; a breakdown below it could prompt further market declines.
Presently, market expectations suggest there’s a 99% likelihood that the Fed will maintain current interest rates, according to the most recent assessments. Although the expectation is for steady rates, any unanticipated aggressive signals from the Fed could place additional pressure on Bitcoin and other risk assets, according to insights from a leading analyst at a cryptocurrency exchange platform.