On-chain gold shorts suffer a $320,000 unrealized loss, reversing the long positions with a 1:2 ratio

On-chain gold token market has experienced a dramatic reversal. The trader known as the “largest on-chain gold short” is paying the price for their short position in PAX Gold(PAXG), currently with an unrealized loss of $320,000. Meanwhile, their counterparty, the “largest on-chain gold long,” has an unrealized profit exceeding $750,000. Behind this betting game reflects the recent continuous rise in gold token prices and a significant shift in market sentiment.

Specifics of the Short Dilemma

Current Losses from Short Positions

According to on-chain data monitoring, this largest short currently holds the following position:

Short PAXG:

• Quantity: 2846.19 tokens
• Leverage: 5x
• Average Entry Price: $4,525.95
• Current Unrealized Loss: $320,000

This loss scale is about 4% of the initial position size. Although 5x leverage is not extreme in crypto markets, ongoing losses are already eroding their account equity.

They are also long BTC

Interestingly, this address is not purely bearish. According to the latest data, the trader also took a long position of 7.71 BTC today with 20x leverage, at an average price of $94,489.2, currently with a small unrealized profit. This indicates they are not solely bearish but have diversified positions across different assets.

Sharp Contrast with the Largest Long

From the comparison, the largest long used a lower entry price and smaller position size but achieved similar gains as the short (plus an additional unrealized profit of $484,000 from silver positions). This divergence reflects differing market opinions on the future trend of gold tokens.

Key Support Levels for PAXG Price Movement

Recent Price Performance

According to the latest data, PAXG is currently priced at $4,636.02, up approximately 2.4% from the short position’s average entry price of $4,525.95. More importantly, its recent upward trend:

• 1-hour increase: 0.15%
• 24-hour increase: 0.69%
• 7-day increase: 3.58%
• 30-day increase: 6.81%

This sustained upward movement is the direct cause of the short’s unrealized loss. Over the past month, PAXG has risen by 6.81%, exerting continuous pressure on short positions.

Market liquidity remains ample

PAXG’s 24-hour trading volume reached $198.93 million, indicating sufficient market liquidity. With a market cap of $177 million, ranking 46th among crypto assets, this liquidity makes large position unwinding relatively manageable but also suggests that price volatility could be more intense.

Deep Market Implications

Rising demand for gold tokens

The ongoing rise of PAXG reflects increasing demand for on-chain gold tokens. As a token backed by physical gold, its price appreciation often signals investor confidence in gold assets. In the current macro environment, this trend carries significant implications.

Risks of high leverage re-emerge

This betting game vividly demonstrates the risks of high leverage. Even at 5x leverage, sustained unidirectional trends can lead to substantial losses. Conversely, the largest long using 20x leverage to long BTC is still with unrealized gains, depending on BTC’s performance after entry. Leverage amplifies both gains and risks.

Divergence among market participants

The opposition between shorts and longs reflects differing judgments about the future of gold tokens. Currently, the bullish view appears more aligned with market reality. However, this divergence also indicates that market voices remain divided, and extreme volatility could occur in turbulent conditions.

Summary

The on-chain gold token market is experiencing a price rally and a shift in sentiment. The $320,000 unrealized loss of the largest short contrasts sharply with the $750,000 unrealized profit of the largest long, representing not only numerical differences but also market expectations of rising demand for gold tokens. PAXG’s 3.58% increase over the past 7 days and 6.81% over 30 days provide a direct explanation for the short’s losses. For market participants, this case reminds us that even seasoned traders can be biased, and high leverage requires cautious risk management. Future focus should be on whether PAXG can sustain this upward trend and how the largest short will respond to the growing losses.