A whale has once again demonstrated the power of crypto shorting, an advanced investment strategy that traders use to generate profits in the volatile crypto market. As per data from Lookonchain, the whale deposited $1.21 million USDC into Hyperliquid and opened a short on Solana.
The whale shorted SOL to maximize profits
The whale deposited $1.21 million USDC into Hyperliquid today, using 20x leverage to short Solana (SOL). With Solana’s price currently hovering at $166.17, this whale is already holding an unrealized profit. His unrealized gains have reached $16 million (97,500 SOL). This investor shorted on SOL at a price of $164.9 and will be liquidated if Solana’s price rises to $172.96.
Here is his investor’s strategy: he bet big on SOL’s downside using the 20x leverage to magnify gains. If the market moves in this favor, he is set to earn massive amounts of profits. However, the liquidation level is not too far (at $172), and SOL’s price surge to this level could wipe out everything within minutes.
Taking advantage of crypto downtrends
This whale’s trading activity highlights the capability of advanced crypto trading strategies. Since a downward trend can be painful to investors, shorting enables traders to take advantage of downtrend movements instead of simply waiting for a potential upcoming market rally. However, this powerful strategy requires investors to understand how it functions.
Shorting means investors borrow an asset, sell it at the current price, and purchase it back later at a more declined price, reaping the price difference. For example, if a trader (like the case above) believes that a crypto asset will fall in price, he borrows it and sells it at a current value, then rebuys it when the price drops.
The use of leverage enables traders to open bigger short positions than their real money allows. Like the case above, with 20x leverage, the whale’s $1.21 million controls a $24.2 million position. While this magnifies gains, it also heightens liquidation risks in case the trade moves against the trader.
Shorting can be a profitable strategy, though it is also risky. A well-calculated short can earn strong profits, but a miscalculated one could rapidly erase a trader’s capital. This explains why understanding how shorting functions is essential.
