This ETH pullback is pretty brutal—a whale’s compounding long position just got wiped back to square one. Now the price is only $42 away from his liquidation line, so he’s really on the edge.

Here’s what happened: This guy started with $500,000 in principal and began compounding long ETH positions from $2,840. When ETH surged to $3,200 the other day, his unrealized profit shot up to $3.34 million—almost a 6x gain. But compounding is a double-edged sword: while it amplifies returns, it also pushes the liquidation price up to $3,000.

Then, early this morning, ETH took a dive and his paper profits basically vanished. Now it all depends on whether he can hold the $3,042 support—otherwise, those millions in gains will disappear in an instant.

Compounding is definitely exciting, but you really need strong risk management. Otherwise, just one pullback can send you right back to square one.