Crypto asset manager Abraxas Capital has made more than $353 million in profit across two main accounts on the decentralized perpetual exchange Hyperliquid.
According to on-chain data from Lookonchain, the firm currently holds net short positions worth more than $1.29 billion. One account has generated approximately $199.6 million in profit, while the other has made $153.6 million.
Abraxas Capital’s 2 hedging accounts on Hyperliquid have made over $353M in total profit!
They currently hold over $1.29B in short positions.
https://t.co/8vMZ7nXh2Z
https://t.co/Un9kxKYGAJ https://t.co/ttsWwwUtmU— Lookonchain (@lookonchain) October 26, 2026
The firm mainly trades Bitcoin and Ethereum perpetual contracts, with short positions worth approximately $712 million and $581 million, respectively.
Read also: Hyperliquid Adds Trailing Stops to Perpetual Markets
Abraxas Capital’s $1.29B short positions do not necessarily signal a market crash
Large short positions often lead traders to expect falling cryptocurrency prices. A user named Meya interpreted Abraxas Capital’s billion-dollar short positions as a strong bearish bet. But the size of these positions alone does not reveal the firm’s overall market exposure.
@lookonchain $1.29B short while sitting on $353M profit is a wild flex
that’s a lot of conviction
— meya. (@birmeya) October 26, 2026
However, this interpretation may overlook how institutional trading strategies work.
Instead of betting that cryptocurrency prices will fall, Abraxas Capital uses a market-neutral arbitrage strategy. As user Max pointed out, the firm’s short positions on a single exchange reveal only one side of its trades.
The word hedging is doing a lot of work here. A $353M profit on hedging accounts is not the same as a directional call, it is usually the other side of a much larger book. That is what makes Hyperliquid data so useful, you can see the size, but you still cannot see the full hedge without the off-exchange leg.
— 𝐌 𝐀 𝐗 (@0_maxiz) October 26, 2026
By holding opposing positions of similar value, Abraxas Capital reduces its exposure to price movements. This allows the firm to pursue profits without depending on whether the cryptocurrency market rises or falls.
Abraxas Capital earns millions from perpetual funding fees
In bullish markets, leveraged traders often build large long positions. When funding rates favour short sellers, these long traders must pay funding fees to short-position holders to keep their contracts open.
Abraxas Capital collects these payments by taking the opposite side of such trades. Rather than relying primarily on Bitcoin or Ethereum prices falling, the firm seeks to earn recurring income from funding fees.
However, the strategy requires substantial capital and careful risk management. X user ADL pointed out that the $1.29 billion figure represents the total value of the positions, not the firm’s actual invested capital. The strategy’s profitability depends on favourable funding rates and the firm keeping its positions open without forced liquidation.
@lookonchain the $1.29b in shorts on hyperliquid is just positions, not equity, so the $353m profit only sticks if the perp funding rate stays negative and they can roll those derivatives without getting liquidated by a squeeze
— ADL (@ADLXBT) October 26, 2026
Abraxas Capital also uses large collateral reserves to protect its positions against sudden market movements. These reserves help keep liquidation prices far from current spot prices, reducing the risk of forced closures during sharp price increases.
This protection is particularly important for short positions, which can suffer heavy losses when prices rise rapidly. Such sudden increases can trigger short squeezes that force traders to close their positions, a risk that frequently affects retail traders using leverage.
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What could threaten Abraxas Capital’s funding-fee strategy?
Abraxas Capital’s $1.29 strategy’s performance depends on funding rates. When demand for leveraged long positions pushes funding rates positive, short-position holders receive payments from longs. However, if market sentiment changes and funding rates turn negative, the firm could have to pay funding fees instead, reducing or potentially reversing its returns.
The size of the positions also creates operational risks. Although matching spot holdings can offset much of the price exposure, it does not eliminate liquidation risk, borrowing costs, execution costs or the possibility that futures and spot prices move differently.
The next phase of the trade will depend less on whether Bitcoin and Ethereum rise or fall and more on whether funding rates remain favourable enough to justify the capital committed to the strategy. If demand for leveraged longs remains strong, Abraxas Capital could continue collecting funding payments. If that demand weakens, returns could shrink, forcing the firm to reassess whether maintaining its large positions is still worthwhile.
Meanwhile, Hyperliquid founder Jeff Yan recently proposed a new way for the US to regulate DeFi. Yan said regulators, including the US SEC and the CFTC, should focus on the companies that run digital trading platforms rather than the underlying Layer 1 blockchains.
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