Crypto traders are pouring unprecedented capital into oil perpetual futures on Hyperliquid, driving daily trading volumes to a record-breaking high above $4 billion. Despite peak annualized funding rates, large short positions remain open as the market frenzy continues, with WTI and Brent contracts leading the historic surge in activity.

Why are oil perpetual futures so active? 

The answer to the activity in oil perpetual futures may lie in Abraxas Capital’s positions. For the past week, the hedge fund has held four large-scale positions in Brent and WTI futures. 

As of April 9, Abraxas closed some of the positions for small realized profits, but the bulk of oil perpetual futures shorts remains. 

Abraxas pays $1.7M in fees for just one of its positions, or roughly $120K an hour during the most active oil trading periods. Since the position of Abraxas Capital was highly visible, other Hyperliquid participants may have tried to copy it. 

The main reason Abraxas took a long position was the oracle structure on HIP-3. HIP-3 uses front-month futures as its oracle, so the price may shift each month when the futures roll. WTI oil is in backwardation, with May futures more expensive than July’s futures. 

This means around April 14, on HIP-3, the May price will roll over to the lower July futures price. In recent months, backwardation has helped traders profit from the price difference, even as they pay high fees. 

During the latest shift period, the position of Abraxas became public. As a result, other traders attempted to short oil futures, waiting for the roll-over period. 

However, the crowded position also meant funding was becoming more expensive. Some traders may end up paying up to 80% of their gains in funding costs. For one of the Abraxas positions, current funding exceeds the unrealized profit. 

The May and June futures may converge toward the end of April, but not during the TradeXYZ rollover period, which ends April 14. This will allow whales to lock in partial gains from the price disparity in oil perpetual futures. 

Oil perpetual futures are also traded for their short-term reactions to developments in Iran and to the transport of oil through the Strait of Hormuz.

On Hyperliquid, oil perpetual futures activity surpassed SOL trading, lining up just behind BTC, ETH, and HYPE. On-chain oil trading is still relatively new, with higher volumes only picking up in March. In the past weeks, Abraxas and other whales have shown one of the strategies that has led to record volumes.

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