Two Ethereum traders have made an incredible $120 million in the previous 24 hours, demonstrating the effectiveness of a DeFi tactic called “looping.” This is a spectacular turn of events. Using the wallet addresses 0x28 and 0x74, the traders increased their exposure to Ether by utilizing a variety of lending methods, and they were rewarded handsomely.

Looping Revealed

The tactic in question, known as looping in DeFi circles, is a trader placing an asset into a lending protocol, such as Ethereum. The trader then uses their deposit as collateral to borrow a different asset, such as the dollar-pegged stablecoin DAI. The original asset is essentially restored by exchanging the acquired DAI for Ether. The ‘leveraged long position’ is established on the trader’s initial Ether deposit thanks to this looping process.

By using this approach, the trader’s capital is effectively multiplied by three to five times, with the leverage commonly ranging from three to five times. But in this case, the astute traders went with a more cautious 1-2x leverage level. This decision reduces possible returns but at the same time lessens the significant dangers that come with increased debt. The first deposit could be lost in liquidation in the event of a large decline in Ether’s price.

Dangerous Bet Pays Off

The owners of these wallets are still unknown, but in 2022, when they were about to be liquidated for $600 million worth of Ether, these wallets had already drawn attention. Since Ether’s value has continued to rise—it is currently trading at over $2,700—that hazardous wager has now paid off handsomely. Ether was originally purchased for $1,000.

For these traders to be subject to liquidation, the price of Ether would have to drop by more than 60%, emphasizing the clever timing and foresight in implementing looping years earlier.

Ethereum Catalysts on the Horizon

Traders that use the looping method are always optimistic about the market because they think prices will rise. Important triggers are approaching for Ether that are adding to this feeling.

To begin with, it is anticipated that the next Dencun upgrade will lower transaction prices on Ethereum’s layer 2 networks, including Optimism and Arbitrum. This upgrade, which is expected to launch on the Ethereum mainnet around March 13, has traditionally been associated with a spike in demand and a rise in the price of ether.

The possible approval of an Ether ETF is another important driver. Heavyweights including BlackRock, Fidelity, and Invesco have submitted for an Ether spot ETF, with a decision anticipated by May 23, in response to the acceptance of Bitcoin spot ETFs. Traders believe that the success of Bitcoin ETFs might be repeated by an Ether ETF, which would raise Ether’s price even more.

The significant profits realized by these two Ethereum traders demonstrate the rich prospects in the DeFi field and the possibility of significant returns from calculated bets, particularly when executed in conjunction with important market triggers.