Major Investment Firm Suffers $190 Million Loss Attempting to Short Bitcoin, Ethereum, and Other Cryptocurrencies: Report by Lookonchain
In the rapidly evolving world of cryptocurrencies, the London-based investment firm Abraxas Capital is currently facing significant challenges. The firm, which manages approximately $3 billion in assets, has incurred unrealized losses exceeding $190 million after attempting to short Bitcoin, Ethereum, and various altcoins [1][2][3][5].
The firm's heavy short exposure, which includes over 113,819 ETH worth about $483 million, has been a major contributing factor to these losses. The recent 41.89% increase in Ethereum's price over 30 days and rising Bitcoin prices near all-time highs have made these hedges very risky [1][3][5]. Market analysts warn that the concentrated short exposure could backfire and potentially trigger a short squeeze, which would further accelerate price increases [1][3][5].
Abraxas Capital employed these short positions partly to hedge its spot holdings, but its complex trading strategy also includes sizable long positions. For instance, the firm holds over $573 million in ETH and $69.4 million in HYPE [5]. This strategy, which may involve funding rate arbitrage on perpetual futures markets, is aimed at balancing the risks. However, the firm’s heavy short exposure currently weighs down its performance amid rising crypto prices [5].
The news of Abraxas Capital's struggles comes amidst a bullish market rally in major cryptocurrencies. At the time of writing, Solana is trading for $184, a marginal decrease on the day, while Bitcoin and Ethereum are worth $122,187 and $4,302, respectively [4]. The market's resilience underscores the challenges faced by firms that bet against its growth.
The Daily Hodl, a news platform that provides news, analysis, and insights into the cryptocurrency market, encourages readers to make informed decisions and not to rely solely on investment advice from any single source. The platform does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is it an investment advisor [1].
Meanwhile, other developments in the cryptocurrency space continue. Plume and Mercado Bitcoin aim to tokenize $500 million real-world assets, driving Real-World Asset (RWA) adoption across Latin America [2]. Solid has launched on Fuse Network, offering decentralized banking for normies [2]. The BYDFi Card has officially launched, aiming to seamlessly bridge Web 3.0 assets and real-world spending [2]. And Little Pepe's Memecoin presale has reached $16,475,000, with Stage Nine sold out [2].
In other news, the US government has been scammed out of $13,000,000 by a fake millionaire who filed fraudulent PPP loans and IRS refunds [3]. A $14,500,000,000 Bitcoin hack has been uncovered, with the thieves still at large [3]. Lookonchain, a market analytics firm, reports that an unknown whale has incurred $20 million worth of losses from a failed attempt to short Ethereum [3]. The firm also highlights Galaxy Digital potentially selling its Solana stash by moving the token into prominent crypto exchanges [3].
The Daily Hodl can be followed on various platforms, including X, Facebook, and Telegram [1]. CARV's AI Stack is being used by builders to prove what's possible [3]. And 113,575 Americans are at risk of fraud after a healthcare firm was hacked, potentially exposing personal data [3].
[1] The Daily Hodl: https://thedailyhodl.com/ [2] Various sources: Plume, Mercado Bitcoin, Solid, BYDFi Card, Little Pepe's Memecoin [3] Various sources: US government scam, Bitcoin hack, Lookonchain, Galaxy Digital, healthcare firm hack [4] CoinMarketCap: https://coinmarketcap.com/ [5] Bloomberg: https://www.bloomberg.com/news/articles/2021-10-20/abraxas-capital-faces-intense-pressure-with-large-crypto-losses
- The losses at Abraxas Capital, which manages $3 billion in assets, stem partially from short positions on Bitcoin, Ethereum, and various altcoins on crypto exchanges, with the firm holding over 113,819 ETH worth about $483 million alone.
- The recent market trend of rising Bitcoin and Ethereum prices is a concern for firms that have bet against their growth, as shown by Abraxas Capital's unrealized losses of $190 million.
- Investing in cryptocurrencies, including altcoins, carries significant risks, as evidenced by the complex trading strategy employed by Abraxas Capital, which involves both long and short positions.
