Ethereum News Today: Hyperliquid's Top Short Seller Trims 65% Exposure as Crypto Volatility Forces Strategic Retreat

Hyperliquid's top short seller significantly reduced its exposure this month, closing positions in XPL and other multi-asset derivatives to cut its total notional value from $760 million at the start of November to $270 million by month-end. The move reflects a strategic rebalancing amid heightened volatility in crypto derivatives markets, as highlighted by on-chain analytics and trading activity from major players.

The largest short position, initially established when Zcash (ZEC) traded near $180, now faces over $21 million in unrealized losses due to sharp price swings. This position, along with a 3x short on ASTER, contrasts with the whale's $241 million in long ETH and XRP exposure. The address, identified as 0x9ee, holds $145 million in ETH and $96 million in XRP, though its ETH position has seen a $4.9 million drawdown. Meanwhile, the ASTER short has generated $8.1 million in gains, illustrating the fragmented nature of market sentiment.

According to market analysis, Abraxas Capital, another major player, shifted from ASTER shorting to long positions, securing $750,000 in profits as market sentiment evolved. Conversely, Resolve Labs and "The Eternal BTC Shorter" continue to bet against ETH and BTC, with the latter maintaining a $128.3 million BTC short. These divergent strategies underscore the uncertainty gripping the sector.

Hyperliquid's native token, HYPE, has fallen below key technical levels, with a 38% drop in futures open interest since late October. The token's 200-day exponential moving average (EMA) breakdown and a bearish MACD crossover signal ongoing selling pressure. Compounding concerns, Hyperliquid recently suspended its Arbitrum bridge-a move that does not affect deposits or withdrawals but has amplified investor unease.

Market liquidity challenges have further intensified. A $5 million loss by Hyperliquid's market maker, triggered by Popcat (POPCAT) price manipulation, exposed vulnerabilities in the DEX's infrastructure. The incident, where a trader artificially inflated bid prices before exiting large long positions, forced the market maker to absorb unfavorable exits. Such events highlight the fragility of liquidity in fast-moving crypto markets.

Whale activity across the broader crypto space also reveals a tug-of-war between profit-taking and aggressive bullish bets. A "BitcoinOG" closed a $193.8 million ETH long position, securing $2.8 million in profits, while another trader remains heavily leveraged on ETH and Dogecoin (DOGE) while shorting Astar and Pepe. Santiment data underscores the influence of large holders, noting that major Ethereum accumulators (100–100,000 ETH wallets) have driven much of the asset's recent 87% rally.

The short seller's exit from Hyperliquid positions aligns with a broader trend of risk-off behavior in crypto derivatives. As institutional and retail traders navigate regulatory shifts and macroeconomic headwinds, the market's reliance on whale activity remains a double-edged sword-capable of fueling rallies but equally prone to exacerbating volatility.