Bitcoin climbed from around $62,000 to above $77,000, and the move crushed leveraged bears. Roughly $3 billion in short positions were liquidated over three days, with more than 170,000 traders forced out.
At the same time, three addresses flagged by on-chain tracking platform Lookonchain — Abraxas Capital, Fasanara Capital and Wintermute — were holding sizable short positions on Hyperliquid. Their combined exposure stood at 138,569 ETH, valued in the article at about $338 million, and 3,425 BTC, valued at about $265 million. The total exceeded $600 million, yet those positions remained intact, with liquidation levels still well above the market.
That kind of positioning can easily be read as a warning that large players expect a sharp reversal. The article’s point was the opposite: these shorts were not necessarily bearish calls.
Spot accumulation and short perps point to a hedged trade
According to on-chain data from Arkham Intelligence, Abraxas Capital withdrew 73,872 ETH from Binance over four days, worth about $173 million. In other words, it was building spot holdings while also running short exposure.
The piece described this as a classic cash-and-carry, or basis trade. The structure is simple: buy the spot asset and short an equivalent amount of perpetual futures. The two legs offset price moves, leaving the trader far less exposed to direction. The main source of return is the funding rate.
Perpetual contracts do not expire, so exchanges use funding payments to keep futures prices anchored to spot. When the market leans long, long holders pay shorts every eight hours. In a bull market, that payment can stay positive for an extended period, allowing short perps to collect income steadily.
Funding turned attractive again in August
Crypto protocol Aegis said that as of Aug. 24, the 30-day average annualized funding rate for BTC perpetuals had recovered to 6.7%, while the 7-day average reached 8.7%. 21shares Capital Markets described the basis as “rich,” meaning attractive for arbitrageurs but not yet overheated.
The article translated that math into dollars: if a firm deployed $265 million into this structure and annualized funding stayed at 8.7%, it could pull in about $23 million a year in funding income while taking little directional risk.
That was also the core of Wintermute CEO Evgeny Gaevoy’s public pushback against media interpretations of market maker shorts. He said those positions reflected “neutral inventory management and premium collection,” not a bearish view.
A window that had been shut for months reopened
The strategy itself is not new. What changed, according to the article, is that the opportunity came back.
Glassnode data showed that from February through July this year, annualized BTC perpetual funding rates stayed compressed for long stretches and at times turned negative. Bitcoin had pulled back from its record high, leveraged longs were repeatedly washed out, and longs were no longer paying shorts in a meaningful way. In a negative funding environment, holding the short leg of the trade becomes a cost instead of a source of income.
August’s sharp rally changed that. After leveraged shorts were forced out, sentiment swung back toward the long side, retail traders started adding leverage again, and funding quickly turned positive. The article said market makers moved in as soon as that window reopened.
Abraxas was cited as withdrawing large amounts of spot ETH from Binance while opening shorts on Hyperliquid. Wintermute’s short exposure on Hyperliquid expanded from $146 million to $191 million, while the firm also deposited about $98.7 million in BTC to Binance for market-making quotes. Onchain Lens called it a textbook market-maker setup.
CME is showing a different signal
Basis trading is not limited to on-chain venues. The article said traditional institutions are also becoming more active on CME.
Glassnode data showed open interest in CME Bitcoin futures recently jumped from about 87,000 BTC to 122,000 BTC, a rise that points to substantial new capital entering the market.
CryptoQuant highlighted a less typical shift: hedge funds on CME recently moved from net short to net long. That matters because institutional basis trades on CME usually involve short futures against spot holdings or Bitcoin ETFs. If that group as a whole turns net long, the article argued, at least some institutions are no longer focused only on harvesting carry and have started taking directional exposure.
Taken together, those signals suggest a split market structure. One group of sophisticated players appears to be running market-neutral basis trades on venues such as Hyperliquid. Another appears to be adding directional longs on CME. One side is collecting relatively predictable yield; the other is betting that the trend continues.
The same structural change may be spreading beyond Bitcoin. ETH perpetual open interest also rose to $14 billion, according to Coinalyze, reaching a multi-month high.
Leveraged longs are paying the bill
The article stressed that the profit from basis trades does not appear out of nowhere. Every funding payment collected by market makers comes from leveraged longs on the other side. When retail traders chase price with 5x or 10x leverage, they pay that fee every eight hours until they close out.
This transfer is ongoing and mostly quiet. The roughly $3 billion in liquidations last week was dramatic and immediate. The continued outflow through funding is slower, but it can keep draining positions over time.
One example in the piece used a retail trader who is 10x long BTC. At an annualized funding rate of 8.7%, about 0.024% of the position’s value would shift to the opposing short side each day. The daily amount may not look large, but it compounds through repetition.
Under that framework, market makers do not need Bitcoin to hit $100,000, and they do not need it to fall back to $50,000. What they need is continued long demand, because that keeps funding flowing to the short leg.
Price has not broken out decisively
Trader @LLuciano_BTC observed that funding had turned positive again even though Bitcoin had not clearly broken out of its current range. He described the setup as “fragile”: long positioning had expanded before price had fully confirmed the move.
If momentum stalls, long holders could be flushed. If the breakout succeeds, shorts may be forced to chase higher.
For institutions running basis trades, though, either outcome leaves the strategy largely intact. If price rises, spot holdings gain while perpetual shorts lose, keeping net asset value close to flat and preserving funding income. If price falls, spot loses while the short hedge gains, and the funding stream still remains.
The article’s final distinction was straightforward: retail traders are betting on direction, while market makers are charging tolls.