Abraxas Capital Still Shorting $500M of Crypto

The address linked to Abraxas Capital Management that was short $500M worth in crypto is still in their shorts via Hyperliquid. The markets have moved higher since the temporary de-escalation in the conflict between Israel and Iran, pushing some of their positions into the red. Notably, their shorts on BTC and HYPE have largely retraced their unrealized profits from days earlier, with the BTC position now in a loss. Nevertheless, the account has closed some of their short positions on ETH and SOL over the past few days, netting them healthy profits. Regardless, the account still holds $17M in unrealized profits and a total profit of over $28M over the last 45 days.

Abraxas Capital Management is a digital assets fund management firm, and is best known for their market-neutral fund, the Elysium Global Arbitrage Fund. As such, despite the size of these positions, these short legs are likely balanced off by long positions in spot or via perpetuals on other wallets or other exchanges.

Abraxas's $500 million short position seems like a large bearish bet, but the context of its market-neutral fund suggests a more complex strategy. Market-neutral strategies are designed to be profitable regardless of the market's overall direction. A common example in crypto is "basis trading," where a fund will simultaneously buy a spot asset (a "long" position) on one exchange while shorting a perpetual futures contract for the same asset on another. The price risk is cancelled out—if the asset's price goes up, the loss on the short is offset by the gain on the long, and vice versa.

If the price risk is hedged, the profit in a market-neutral strategy often comes from capturing the "funding rate." This is a mechanism unique to perpetual futures, where periodic payments are made between traders holding long and short positions to keep the contract's price pegged to the spot price. Typically, when the market is bullish, longs pay shorts a small fee. By holding both sides of the trade across different venues, Abraxas isn't betting on a price crash but is systematically collecting these payments. Therefore, their large short position on Hyperliquid is very likely just one-half of a broader, carefully balanced arbitrage play.