Why Abraxas Capital Is Buying ETH While Shorting It on Hyperliquid

A fund can be long ETH in the spot market and short ETH perpetuals at the same time without making a contradictory market call. The likely objective is to capture carry—perpetual-futures funding and the difference between derivatives and spot prices—while keeping its overall exposure to ETH price moves comparatively low.

On September 3, blockchain tracker Lookonchain reported that Abraxas Capital bought 16,554 ETH, valued at about $39.8 million, while two accounts described as its Hyperliquid hedging accounts held a combined 120,178 ETH short position worth roughly $291.4 million. 1633 That is a much larger visible short than the newly reported spot purchase, so the transaction alone does not establish a fully matched ETH hedge. It may be one adjustment within a broader, partly off-chain portfolio.

How a spot-plus-short basis trade works

The basic structure is straightforward:

1. Buy or hold ETH in the spot market.
2. Sell ETH perpetual futures or futures.
3. Seek to earn the derivatives premium to spot, positive funding paid by perpetual longs to shorts, or both.

If the quantities are closely matched, a move in ETH has opposing effects: spot ETH rises when the short loses money, and spot ETH falls when the short gains. The intended return is therefore less dependent on ETH’s outright price direction and more dependent on the carry available in the derivatives market.

In perpetual futures, funding payments periodically transfer value between longs and shorts. When funding is positive, longs pay shorts, which can make a short-perpetual/long-spot position attractive. A trader may also benefit when a futures or perpetual premium narrows toward spot. These returns must exceed trading fees, slippage, borrowing or capital costs, and the cost of maintaining collateral.

What the September position does—and does not—show

The September snapshot shows 16,554 ETH of newly reported spot buying against 120,178 ETH of visible shorts across two Hyperliquid accounts. 1633 It supports the interpretation that Abraxas was actively managing a hedge or relative-value book, but it cannot disclose:

• the firm’s ETH held in other wallets, exchanges, custodians, or vehicles;
• the timing and entry prices of its spot and short legs;
• whether some short exposure hedged other crypto assets or client activity;
• collateral posted against the perpetual positions; or
• the firm’s total net delta after all positions are included.

That distinction matters. A large short notional on a public perpetuals venue is not, by itself, evidence of a net bearish view.

A summer pattern of large gross shorts

The September activity followed a period of conspicuous gross short exposure on Hyperliquid. Around August 24, reports based on on-chain tracking put Abraxas’s total short book near $783 million across ETH, BTC, HYPE, and SOL. Over the preceding four days, the firm reportedly withdrew 73,872 ETH—then worth about $173 million—from Binance while maintaining the short book. 415

By August 29, a separate report put the visible aggregate Hyperliquid short exposure above $472 million, including reported shorts in BTC, ETH, SOL, and HYPE. 32 The changing figures illustrate why a snapshot should not be treated as a stable portfolio disclosure: gross exposure can be resized quickly as prices, funding, liquidity, and collateral needs change.

Why the strategy can still lose money

“Market neutral” does not mean risk-free. The trade may be designed to reduce directional exposure, but several risks remain:

• Hedge mismatch: Spot and perpetual quantities, timing, and venues may not line up perfectly.
• Funding reversal: If funding turns negative, a short perpetual can become a cost rather than an income source.
• Basis risk: The gap between the derivative and spot price can widen instead of narrowing.
• Margin and liquidation risk: A rally can cause immediate mark-to-market losses on the leveraged short leg, requiring collateral even when spot holdings are gaining elsewhere.
• Execution and venue risk: Liquidity, smart-contract, custody, exchange, and counterparty risks can matter materially when the hedge spans venues.

The late-August rally was a stress test for such positions. Reporting at the time said Bitcoin had risen about 23% over the week to roughly $77,500, while approximately $2.5 billion in BTC shorts had been liquidated since August 19. 20 Reports also described substantial unrealized losses on tracked Hyperliquid short positions during the move, though published estimates differ by source and portfolio scope. 631

The key lesson is that a hedge can work economically over time yet still face severe interim margin pressure. Spot gains may be held elsewhere, may not be immediately liquid, or may not fully offset a short that is larger, leveraged, or imperfectly matched.

The more useful way to read the trade

Abraxas’s two active Hyperliquid accounts and concurrent spot activity point to ongoing exposure management rather than a one-time directional trade. The relevant question is not the headline value of the visible short position. It is the firm’s unobservable net exposure after spot inventory, derivatives, collateral, and positions outside the tracked accounts are considered.

Based on the available on-chain reporting, the clearest interpretation is a carry-oriented, dynamically hedged strategy: own or source spot ETH, short perpetuals, and seek returns from funding and basis spreads. But the public data cannot confirm the full hedge ratio, the profitability of the trade, or Abraxas’s ultimate market view. 1633