The market rallied. Shorts got crushed. $2.74 billion in liquidations on August 19. The narrative is clear: bulls are in control. But three trading firms still hold over $600 million in short positions on Bitcoin and Ethereum. The instinct is to scream "short squeeze incoming." That instinct is wrong.
Context: The Liquidation Aftermath On August 19, 2026, a sharp rally in Bitcoin and Ethereum triggered massive liquidations. In just 60 minutes, shorts lost $1.3 billion. Total for the day: $2.74 billion. BTC hit $77,381, ETH at $2,440. The market celebrated. But on-chain data from Lookonchain and Onchain Lens revealed three firms—Abraxas Capital, Fasanara Capital, and Wintermute—still holding significant short exposure. The immediate reaction: "They're going to get wrecked."
But the numbers tell a different story. Abraxas holds four short positions with liquidation prices ranging from $128,767 to $251,028 for BTC, and $3,958 to $4,008 for ETH. Current prices are $77,381 and $2,440 respectively. That's a 66% rally needed for BTC liquidation, and 62% for ETH. Fasanara is running a 15x leveraged ETH short, already underwater by 18.87%. Wintermute increased its short exposure on Hyperliquid to $190 million.
Core: These Are Not Directional Bets Based on my experience auditing hedging strategies during the 2022 Terra collapse, I can tell you that these positions scream "delta neutral" or "market making hedge." Look at the liquidation prices: they are far above spot. No directional trader opens a short with a liquidation price 66% above entry. That's not a bet; it's a hedge. Wintermute, as a market maker, needs to hedge its long inventory. Abraxas and Fasanara are likely running similar strategies—shorting futures to offset long spot or option positions.
The real story is the structure. The remaining $600 million in shorts are not vulnerable to a squeeze. They are designed to survive a 100% rally. The market has already squeezed out the weak hands. What remains is institutional positioning designed for a different game.
Contrarian: The Squeeze is Over, the Chop is Here Retail sees the open short interest and thinks "buy the dip, squeeze the shorts." But the remaining shorts are the smart money's hedges. They are not going to cover unless the market breaks above their liquidation levels—which would require a massive new catalyst. The real risk is the opposite: if these firms decide to increase their hedges, or if the underlying spot positions unwind, the market could face a liquidity vacuum.
Notice that Fasanara's 15x ETH short is already in deep drawdown. That's a position that could be closed if the firm decides to cut losses. But that would actually be bullish—covering the short. The market is now in a tug-of-war between institutional hedging flows and retail momentum. The next move is not a squeeze; it's a grind.
Takeaway: Watch the Levels, Not the Noise Don't chase the narrative of a short squeeze. The easy money has been made. Now the market is chopping. The key levels to watch are the liquidation prices: $128K for BTC, $3,958 for ETH. If we approach those, the hedge shorts will start to unwind, but that's a long way off. For now, the smart money is hedged, and the only edge left is positioning for volatility, not direction.
We trade the chart, but we survive the chaos. Every exploit is a lesson paid for in real time. Silence is the only edge left in the noise.
