Basis Traders Profit as Bitcoin Funding Rates Climb

Large trading firms Abraxas Capital, Fasanara Capital, and Wintermute accumulated significant short positions in Bitcoin and Ethereum perpetual contracts on Hyperliquid as the price surged last week.

Their combined position reached $338 million in ETH value and $265 million in BTC value, exceeding $600 million across both assets.

This strategy is called a 'basis trade' or 'cash-and-carry,' where traders hold spot assets while shorting an equivalent amount in perpetuals to cancel out exposure to price movements and profit from the funding rate.

Bitcoin's funding rates had been suppressed or negative since February, but last week's price surge pushed them back into positive territory, making this strategy attractive once again.

The annual yield for Bitcoin basis is in the upper single-digit range, with a 30-day average of 6.7% and a seven-day average of 8.7%, according to the Aegis protocol.