Recently, an interesting on-chain operation appeared: a large holder made a quite bold move in a short period of time—buying 4,600 ETH (worth about $13 million) while simultaneously opening a 20x leveraged short contract. At first glance, it seems a bit "crazy," but behind it is actually a risk management strategy used by institutional-level players.

After reviewing this large holder's trading records, I found that he's not really betting on market direction but rather exploiting the spread between spot and futures prices. This kind of operation sounds complex, but the core logic is actually simple: accumulating spot holdings while taking high-leverage short positions, effectively insuring against short-term declines.

How does it make money? If the market rebounds, the spot holdings benefit; if it drops sharply, the short position can yield huge profits. The key is the 20x leverage setting—if the price fluctuates within a 5% range, the gains on the contract side can cover the entire holding cost. So regardless of which way the market moves, there's profit to be made.

This large holder is using platforms that are primarily high-frequency futures trading environments, indicating he’s likely engaging in arbitrage or laying the groundwork for bigger moves ahead. The timing of such operations is also critical—they usually occur just before a market reversal. On the surface, it looks like both long and short positions are open, but in reality, whales have already determined that this price level is near the bottom zone, willing to pay leverage costs to lock in positions, though it may not immediately lead to a rally.

Don’t instinctively fear this kind of operation. Opening both long and short isn’t about being bullish or bearish; it’s a professional trader’s way of generating profits in an environment with uncertain certainty.

From a retail investor’s perspective, current market liquidity is indeed weak, and a large order can easily trigger follow-on trades. But copying this hedging strategy directly can be risky—leverage costs can eat into your profits. If you’re long-term bullish, building positions gradually and holding spot assets is more stable; if you want to short-term trade volatility, you must strictly control your position size and risk exposure.