A whale address beginning with 0xf17 started unwinding its HYPE carry trade on Aug. 4 by selling HYPE spot and buying back an equal amount of perpetual shorts, according to TradingBeats, formerly Hyperinsight.
The address had previously maintained a near 1:1 hedge between HYPE spot holdings and perpetual short positions, using the structure to collect positive funding while offsetting price swings.
Both sides of the hedge fall to about 107,900 HYPE
Based on a pre-reduction position of about 146,800 HYPE, both the spot leg and the perpetual short leg have now been reduced to roughly 107,900 HYPE. Each side is down by nearly 39,000 tokens, a decline of about 26.5%.
Two TWAP orders still being executed are set to process a combined 90,000 HYPE:
- On the spot side, about 33,200 HYPE has been sold, with turnover of about $1.8 million.
- On the derivatives side, about 33,100 HYPE of shorts has been closed, with turnover of about $1.795 million.
Including orders completed earlier, the whale’s perpetual short position has been reduced by about 39,000 HYPE in this latest round. The current notional value of the spot holdings and the short position stands at about $5.87 million each, putting the combined two-leg exposure at about $11.74 million, down about $4.24 million from before the reduction.
Funding-rate pullback narrows carry returns
The position cut comes as HYPE carry income has moved off recent highs. On a daily basis, HYPE’s cumulative funding rate fell from +0.02790% on Aug. 1 to +0.02227% on Aug. 3, a drop of about 20.2%.
Over the most recent four hours, the cumulative funding rate also fell 19.1% compared with the previous four-hour period.
Based on the current short size, estimated daily gross funding income declined from about $1,638 to $1,308.
On a weekly basis, the cumulative rate for July 28 to Aug. 3 was about +0.17803%, which was 16.9% lower than the +0.21425% recorded during the peak week of July 14 to 20. HYPE funding was last reported at +0.0013%, implying an expected annualized return of about 10.9%.