Let's analyze the BFX Ethereum margin exposure, which has attracted a lot of attention.

Why this entity is holding such a big margin position on ethereum? Paying margin funding interests?

Is he holding the position using crypto collateral?

If this entity was holding this position with Ethereum collateral what would its requirements be?

Let's analyze the ETHUSD trading pair.

Let's say the avg entry price is 130$.

At 90$ the position held 1M ETHs.

Eth to hold that position (minus margin requirement): 1.5M

Add margin requirements on top of that ( which are a minimum of 20%, which is a low number considering margin reqs grow as position size grows).

1.5m + 20% = 0.3M ETH

So, just to keep the ETHUSD position this entity holds: 1.5M + 0.3M + 1M = 2.8 M Ethereums

Now let's add another 0.7M Ethereums held in ETHBTC longs, (I won't add the BTC margin requirements here).

It takes us to an astonishing 3.5M eth held.

BFX (public) ethereum wallets hold approx 4.3M ETHs.

If this position was held by ETH collateral then the entity (or entities) must own approximately 78% of the total ETH bfx wallet. (Without considering yet the margin requirements for ETH/BTC).

Possible? Yes.

Probable? I don't think so.

Last but not least, would be bitfinex really ok in hosting such a risk in their platform? The liquidation event of at least 3.5M Eths?

Time will tell.