Crypto Millionaire Faces $43 Million Loss in Ether vs. Bitcoin Bet

James Fickel, recognized as one of the leading figures in cryptocurrency investments, has encountered significant losses exceeding $43 million since January 10. His debts on the decentralized lending platform, Aave, have escalated to $132 million.

As an early investor in Ethereum and founder of the Amaranth Foundation, Fickel’s recent trading strategy involved betting on Ether’s performance against Bitcoin. His decision to borrow Wrapped Bitcoin (WBTC) has not paid off as anticipated.

Initially borrowing $172 million worth of WBTC on January 10, Fickel expected Ether prices to appreciate relative to Bitcoin. However, the outcome has been unfavorable, resulting in substantial losses.

“From Jan 10 to July 1, he borrowed 3,061 WBTC (worth $172 million) from Aave and exchanged it for 56,445 ETH at a rate of 0.05424. Subsequently, he spent $12 million of USDC to buy 211 WBTC and exchanged 16,000 ETH for 671 WBTC ($39.9 million) at a rate of $0.042 to repay the debt on Aave.”

Since the beginning of 2024, Ether’s performance has lagged behind that of Bitcoin. Data from Binance indicates that Ether’s price relative to Bitcoin has decreased by over 24% year-to-date and more than 9% in the last month.

Fickel’s Debt Exceeds $132 Million on Aave

As of September 14, Fickel’s total borrowing on Aave has surpassed $132 million in WBTC. This escalating debt is a result of his prior expectation that Ether would perform better than Bitcoin. By borrowing Bitcoin to invest in Ether, he inadvertently placed a short position on Bitcoin, leading to his financial setbacks.

Fickel gained notoriety for investing $400,000 in Ether when its value was just $0.80.

Ether ETFs Experience Significant Outflows

Ongoing outflows from U.S. Ether exchange-traded funds (ETFs) are contributing to the lackluster price performance of Ether. Since their introduction to the marketplace on July 23, the ETH ETFs have experienced negative net outflows totaling $581 million. Grayscale’s ETF has accounted for the majority of this, with over $2.7 billion drained, according to reports from Farside Investors.

Investor expectations for a substantial price surge following the launch of the Ether ETFs have not materialized as hoped. In contrast, Bitcoin ETFs captured around 75% of new investments in the cryptocurrency, pushing Bitcoin prices above the $50,000 mark.