Abraxas Capital hedges $353M ETH short with $32M buy – Here’s why

Ethereum [ETH] has stagnated, hovering between $2.4k and $2.5k. Moreover, with the prolonged sideways movement, $2.5k has turned out to be a stubborn resistance level.

At press time, Ethereum was trading around $2480, after slightly falling by 0.45% on the daily charts. 

Abraxas Capital hedges $353M ETH short

With ETH trading in a narrow range, high net worth investors who expected a major slip are counting losses. In recent weeks, Abraxas Capital has been aggressively shorting the market. 

Two weeks ago, AMBCrypto reported that Abraxas Capital had built $783 million worth of short positions on Hyperliquid and bought $173 million on the spot to hedge the risk. Since then, this position has reduced significantly. But still, liquidation risk for short positions remains extremely elevated.

In fact, $7.3 million worth of short positions were liquidated over the past 24 hours. Since Abraxas Capital understands the risk associated with such elevated leverage, it has turned to hedging on the spot. 

According to Lookonchain, Abraxas Capital bought another 13,000 ETH worth $32.39 million. The purchase aimed to hedge its 141,180 ETH, worth $353.27 million, in short positions on Hyperliquid.

Abraxas Capital has been recently deploying this risk management, hoping one side could absorb risk from the other. Often,  purchasing on the spot leaves Abraxas Capital safe, in case the price pumps and shorts are forced out of the market. 

Can the spot buys boost ETH price?

Although Ethereum has struggled to make an upside move, pressure remains minimal. This is evidenced by the fact that the Exchange Supply Ratio (ESR) has been on a decline over the past week.

In fact, at press time, ESR had dropped to late August levels, indicating that supply that surged in early September had been absorbed. 

With the ESR dropping, it indicates more outflows compared to inflows, which have historically helped assets make gains on the charts.

In fact, Ethereum still leans bullish as ETH’s momentum indicators have held positive throughout this period of consolidation. The Momentum Shift indicator hovered around 766 as of writing, suggesting the lows are not as deep.

Therefore, if the current market conditions hold, Ethereum is likely to continue moving sideways, with $2.5k as resistance. However, if the spot buying continues to reduce available supply, a breakout could be observed from this range, with $2.8k as a target.

Final Summary

• Abraxas Capital purchased 13,000 ETH worth $32.39 million to hedge its 141,180 ETH worth $353.27 million in shorts. 
• Ethereum [ETH] remains stuck within a thin range, but a declining exchange supply signals a potential breakout.