Crypto millionaire James Fickel has incurred losses of over $43 million since January 10th due to his debt on the decentralized lending platform Aave, which has surged to $132 million.
Fickel, an early investor in Ethereum and the founder of longevity research firm Amaranth Foundation, lost a staggering $43.7 million by essentially betting on the price of Ether (ETH) against Bitcoin (BTC).
According to a post by Lookonchain on September 14th, Fickel made investments in 2024 and expected the price of Ether to rise against Bitcoin when he first borrowed $172 million worth of Wrapped Bitcoin (WBTC) on January 10th.
However, since the beginning of 2024, Ether has underperformed compared to Bitcoin. Binance data reveals that Ether’s price relative to Bitcoin has dropped by more than 24% year-to-date (YTD) and over 9% in the past month.
Fickel’s debt on the decentralized lending platform Aave has reached over $132 million worth of WBTC as of September 14th, as reported by Debank. His increasing debt is a result of his earlier belief that Ether would outperform Bitcoin. By borrowing Bitcoin to purchase Ether, he effectively took a short position on Bitcoin. Unfortunately, as Ether’s price dropped relative to Bitcoin, this strategy led to his losses.
Fickel is well-known for his $400,000 investment in Ether when it was only worth $0.80.
The continuous outflows from US Ether exchange-traded funds (ETFs) are also contributing to Ether’s sluggish price action. Since their debut on July 23rd, the ETH ETFs have recorded a cumulative $581 million worth of negative net outflows. Grayscale’s ETF alone accounted for over $2.7 billion worth of net outflows, according to Farside Investors data.
Investors had high hopes for the launch of Ether ETFs, anticipating a significant price increase. In the case of Bitcoin, ETFs accounted for about 75% of new investment in the cryptocurrency when it surpassed the $50,000 mark by February 15th.
There is a proposed change that could potentially save Ethereum from its L2 “roadmap to hell.”