What to Know

  • Bitcoin has surged back above $80,000, reviving demand for market-neutral yield strategies in crypto derivatives.
  • Abraxas Capital, Fasanara Capital, and Wintermute collectively hold short positions of 138,569 ETH, worth about $338 million, and 3,425 BTC, worth about $265 million, on Hyperliquid.
  • Abraxas Capital withdrew 73,872 ETH, valued at approximately $173 million, from Binance over the past four days.
  • BTC funding rates remain positive and elevated across major exchanges, near 0.01% per 8 hours.
  • The 30-day average BTC perpetual funding rate reached 6.7% annualized on Aug. 24, while the 7-day average hit 8.7%.
  • CME bitcoin futures open interest climbed from roughly 87,000 BTC to 122,000 BTC in recent weeks.
  • CryptoQuant data shows hedge funds on CME have recently flipped net long on bitcoin futures, an unusual shift for a cohort often associated with basis trading.
  • Aggregated open interest in ETH perpetuals has reached $14 billion, a level not seen in several months.

Bitcoin’s Rally Reopens the Carry Window

Bitcoin’s rebound above $80,000 has done more than lift market sentiment. It has revived one of the crypto market’s most important institutional yield trades, allowing sophisticated trading firms to collect funding payments without necessarily betting on whether bitcoin or ether will rise next. The return of positive funding has changed the opportunity set after a long period in which the trade was less attractive, compressed, or in some cases costly to maintain.

The setup comes after a sharp rally in which bitcoin moved from around $62,000 to above $77,000 in a matter of days last week. That move erased $3 billion from leveraged short sellers who had built bearish exposure during the prior drawdown. For many discretionary traders, the surge was a test of direction and conviction. For market-making firms and systematic desks, however, the rally created a different kind of opening: a chance to use spot crypto holdings and short perpetual futures to collect yield from bullish positioning elsewhere in the market.

Onchain data shows that major crypto trading firms have built large short perpetual futures positions on Hyperliquid, the onchain derivatives exchange. Abraxas Capital, Fasanara Capital, and Wintermute collectively hold short positions of 138,569 ETH, worth about $338 million, and 3,425 BTC, worth about $265 million. In isolation, those positions could look like bearish bets. In the context of spot accumulation and exchange withdrawals, they are more consistent with a cash-and-carry structure designed to harvest funding while reducing outright price exposure.

How the Cash-and-Carry Trade Works

The strategy is often called a cash-and-carry trade, or a basis trade. In crypto, it usually involves buying or holding spot bitcoin or ether while simultaneously shorting an equivalent amount through perpetual futures. The spot position benefits if the asset rises, while the futures short loses. If the asset falls, the spot position loses while the futures short gains. When sized correctly, the two sides largely offset each other, leaving the trader focused on the funding payments embedded in the derivatives market.

Perpetual futures do not expire in the same way traditional futures contracts do. Instead, they use funding payments to keep the contract price aligned with the underlying spot market. When bullish demand is strong and perpetual futures trade above spot, longs typically pay shorts. That is the environment basis traders prefer. By holding spot and shorting perpetuals, they can collect the payment from leveraged longs while aiming to keep net directional exposure low.

BTC funding rates remain positive and elevated across major exchanges, at around 0.01% per 8 hours. Aggregated perpetual funding rates are currently around 0.0109% per hour for bitcoin and 0.0087% for ether. At institutional scale, even high-single-digit annualized returns can be meaningful, particularly when the strategy is supported by deep liquidity, collateral management, and operational systems that allow firms to rebalance exposures quickly.

The recovery in funding has been sharp. The 30-day average BTC perpetual funding rate reached 6.7% annualized on Aug. 24, while the 7-day average rose to 8.7%. Those figures show that funding has moved decisively away from the weak conditions that dominated much of the earlier period. Market participants view that shift as a sign that speculative demand has returned, though not necessarily as proof that the rally is secure.

Abraxas Withdrawals Point to Spot Positioning

Abraxas Capital’s activity is drawing attention because of the scale of its spot movement. Onchain data shows the firm withdrew 73,872 ETH, worth approximately $173 million, from Binance over the past four days. Large withdrawals from centralized exchanges can have several explanations, including custody management, collateral strategy, or transfer to other venues. In the current derivatives backdrop, the movement also fits the pattern of a desk preparing or maintaining spot inventory alongside short perpetual exposure.

That distinction matters. A short futures position alone may be interpreted as bearish. A short futures position paired with spot holdings is something else: a market-neutral yield structure. The goal is not necessarily to profit from falling prices, but to capture the spread created when leveraged traders are willing to pay for long exposure. In bull phases, this kind of structure can become one of the dominant institutional trades because it transforms speculative enthusiasm into funding income for liquidity providers and well-capitalized desks.

Still, the trade is not risk-free. Execution risk, exchange risk, liquidation mechanics, collateral constraints, and sudden funding reversals all matter. If funding turns negative, a trader short perpetuals may have to pay rather than receive. If spot and derivative prices diverge sharply, the hedge can become more complex. Firms running the trade at scale generally rely on strong balance sheets, multiple venues, and automated risk systems to manage these pressures.

Funding Had Been Weak Before the Rebound

The current environment marks a notable change from the preceding months. Bitcoin’s annualized perpetual funding rate spent much of the February through July period compressed or negative as the market sold off from all-time highs above $120,000 and leveraged longs were steadily unwound. When longs are not paying shorts, the cash-and-carry trade loses much of its appeal. In negative funding conditions, maintaining the same position can become a cost rather than a source of income.

This month’s price surge changed the economics quickly. As leveraged short sellers were forced out by rising prices, funding flipped firmly positive. That reopened the window for basis traders, especially in bitcoin and ether. The trade has also expanded beyond those two largest assets. Market participants have noted that basis opportunities are now richer across major crypto assets, with Solana among the assets seeing elevated carry.

The important point is that the return of funding income does not automatically mean firms are predicting a straight-line rally. In many cases, the structure is designed precisely to avoid having to make that call. For large market makers, the appeal lies in being paid by the market’s demand for leverage while keeping price risk contained. That is why short perpetual positions can grow even during a bullish market without necessarily signaling a broad institutional bearish view.

Regulated Futures Markets Show Institutional Demand

The activity is not limited to onchain venues. CME bitcoin futures open interest, a widely watched gauge for institutional participation in regulated derivatives, has climbed from roughly 87,000 BTC to 122,000 BTC in recent weeks. That increase shows that institutional exposure has expanded as bitcoin’s rally revived interest in derivatives positioning.

There is also an unusual shift inside the CME data. Hedge funds on CME have recently flipped net long on bitcoin futures. That is notable because the basis trade structurally tends to place this cohort on the short side of futures when paired against spot or other long exposure. A net-long position suggests that at least some institutional players may be taking outright directional exposure to further upside rather than only running a market-neutral carry trade.

Ether derivatives are also showing renewed activity. Aggregated open interest in ETH perpetuals has climbed to $14 billion, a level not seen in several months, even as the price surge appears to be stabilizing. Rising open interest can signal deeper participation and improved liquidity, but it can also indicate that leverage is building. When leverage grows quickly, the market can become more sensitive to abrupt price moves, especially if funding remains positive and longs become crowded.

Why Traders Are Watching Fragile Positioning

Some chart watchers have described the current setup as fragile because funding has turned positive while bitcoin has struggled to push meaningfully higher at times. When positioning becomes bullish before price confirms a continuation move, the market can become vulnerable in both directions. A breakdown may force leveraged longs to exit, while a breakout may force remaining shorts to chase the move higher.

Other traders have flagged the risk that crowded leveraged longs could increase the odds of a sharp flush or pullback if momentum stalls. Such a move could affect both outright directional traders and basis traders, particularly if volatility disrupts funding, collateral efficiency, or execution across venues. Basis desks are generally built to withstand volatility better than one-sided leveraged accounts, but they still operate inside a market structure where liquidity and funding can shift quickly.

For now, the key driver is the return of positive funding after months of weak carry conditions. For firms with the infrastructure to manage spot assets, short perpetual futures, collateral, and venue risk, the environment offers a renewed source of yield. That makes the current rally important not only for bitcoin’s price action, but also for the institutional mechanics beneath the surface of the crypto market.

Market-Neutral Does Not Mean Risk-Free

The phrase market-neutral can sometimes create the impression of safety, but the cash-and-carry trade depends on several moving parts. Traders must maintain the relationship between spot holdings and derivatives exposure. They must monitor funding intervals, collateral requirements, exchange liquidity, and potential changes in open interest. If funding compresses again, the yield opportunity can fade. If funding reverses, the economics can turn unfavorable.

That said, the strategy remains one of the cleaner ways for professional crypto firms to monetize bullish leverage demand without simply buying into a rally. It can also provide liquidity to the market by taking the other side of leveraged long demand. In strong markets, this dynamic can persist for long periods as long as bullish traders continue paying for exposure and spot liquidity remains sufficient to support hedging.

The current revival of the trade shows how quickly crypto market structure can reset. A price rally that punished leveraged shorts also revived funding income for firms willing to short perpetual futures against spot holdings. Whether the next phase brings continuation, consolidation, or a pullback, the return of positive funding has put the basis trade back at the center of institutional crypto strategy.

Frequently Asked Questions (FAQs)

Why are trading firms shorting bitcoin and ether during a rally?

Many firms are not necessarily making bearish bets. They may be holding spot crypto while shorting perpetual futures, creating a cash-and-carry trade designed to collect funding payments from leveraged longs.

What is a cash-and-carry trade in crypto?

It is a strategy where a trader holds spot crypto and shorts an equivalent amount of perpetual futures. The goal is to reduce directional price exposure and capture funding payments when longs pay shorts.

How large are the reported short positions on Hyperliquid?

Abraxas Capital, Fasanara Capital, and Wintermute collectively hold short positions of 138,569 ETH, worth about $338 million, and 3,425 BTC, worth about $265 million, on Hyperliquid.

What did Abraxas Capital withdraw from Binance?

Abraxas Capital withdrew 73,872 ETH, valued at approximately $173 million, from Binance over the past four days, a move that may align with spot positioning for a basis trade.

Why do positive funding rates matter?

Positive funding means leveraged longs are paying shorts in perpetual futures markets. That creates potential income for traders who hold spot crypto and short perpetual contracts in matched positions.

What happened to bitcoin funding earlier in the year?

Bitcoin’s annualized perpetual funding rate spent much of the February through July period compressed or negative as the market sold off from all-time highs above $120,000 and leveraged longs were unwound.

Are institutional traders active in regulated bitcoin futures?

Yes. CME bitcoin futures open interest climbed from roughly 87,000 BTC to 122,000 BTC in recent weeks, showing renewed institutional activity in regulated derivatives markets.

Does the basis trade remove all risk?

No. The strategy can reduce directional exposure, but it still carries risks tied to funding reversals, collateral requirements, exchange liquidity, execution, and sudden market volatility.

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