Trader piles $118m into bet Bitcoin will outperform Ether.
A trader added almost $21 million to a short position that pays off when Bitcoin outperforms Ethereum.
The trade, which was executed via the DeFi protocol Aave brought the total position to $118 million on April 3.
Aave is an open source and non-custodial lending protocol that enables users to deposit one crypto asset and borrow another against it.
According to Llamafolio, an onchain wallet tracking tool, the user now has 2,648 wBTC deposited, around $180 million, and is borrowing 35,894 Ether, about $118 million.
The wallet has been labelled by Nansen, a blockchain analytics platform, as belonging to Multicoin Capital, which did not respond to DL News’ request for comment.
wBTC is a token on the Ethereum blockchain that is backed one-to-one by Bitcoin.
The wallet was originally funded on December 19 with a test transaction, where a user sends small amounts of crypto to the wallet to ensure control.
On December 20, while Bitcoin was around $43,000, the wallet received 1,100 wBTC and 997 wBTC, around $91 million.
They went on to deposit 1,822 wBTC into Aave and borrowed 22,130 Ether, around $48 million.
This strategy, depositing wBTC and borrowing Ether against it, is effectively a short position on Ether relative to Bitcoin.
This is because if the value of Ether falls relative to Bitcoin, the user can then repay the Ether they borrowed at a lower value.
Since adding to the position April 3, Ether has fallen 3% relative to Bitcoin, meaning the bet is paying off so far.
On the other hand, if the value of Ether increases relative to the price of Bitcoin, the user can be liquidated.
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