The Strategic Shift in Bearish Crypto Trading: ZEC, MON, and ETH Shorting on Hyperliquid

The cryptocurrency derivatives market has entered a new phase of strategic bearish positioning, with institutional-grade shorting activity on platforms like Hyperliquid offering critical insights into market sentiment and contrarian opportunities. As 2025 unfolds, the interplay between large-scale short positions in Zcash (ZEC), Monero (MON), and Ethereum (ETH) and contrasting retail and institutional dynamics reveals a nuanced landscape for investors.

ZEC: A Tale of Volatility and Institutional Caution

ZEC has emerged as a focal point for bearish speculation, with the largest short position on Hyperliquid expanding to $24.3–$25.7 million in exposure. Despite recent price surges-peaking at $750 in November 2025-the position has incurred unrealized losses ranging from $1.4 million to $3.47 million, reflecting the asset's inherent volatility. Notably, the whale behind this position has also increased its MON short to $9.9 million at an average price of $0.0327, signaling a broader bearish thesis. However, ZEC's short position has shown intermittent gains, such as a $250,000 unrealized profit following a price decline, indicating active management and a willingness to average down. This duality-sharp losses amid strategic additions-highlights the asset's potential for both risk and reward.

MON: Institutional Shorting Amid Retail Resilience

Monero's shorting activity on Hyperliquid has gained traction, with a $9.9 million position now among the platform's largest. While privacy-focused assets like MON typically attract retail interest due to their resistance to surveillance, institutional bearishness suggests skepticism about their long-term utility in a regulatory tightening environment. The contrast between retail optimism and institutional caution creates a fertile ground for contrarian strategies, particularly if regulatory clarity or macroeconomic shifts alter the asset's trajectory.

ETH: Profitability and Contrarian Divergence

Ethereum's short positions on Hyperliquid stand in stark contrast to ZEC's struggles. The largest ETH short, valued at $79.53–$87.3 million, has generated unrealized gains of up to $8.15 million (140%), underscoring the asset's bearish momentum. This profitability aligns with broader institutional trends, such as a $100 million long position opened by crypto whales on November 26, 2025, which hints at a potential tug-of-war between bullish and bearish forces. For contrarian investors, the ETH short's success raises questions about whether the position is nearing a reversal point, especially as funding rates for ETH hover around 0.01% every 8 hours-a baseline reflecting a "new normal" in perpetual contract markets.

Institutional vs. Retail Dynamics: A Contrarian Lens

Hyperliquid's long vs. short ratio for its native token (HYPE) reveals a 69% long bias among retail traders, suggesting widespread bullish sentiment. This contrasts with institutional activity, where large-scale shorting in ZEC and ETH dominates. For example, a whale deposited $1.23 million to open a 2x leveraged short in ZEC, while another allocated $16 million to a 10x leveraged Bitcoin short. These divergent strategies highlight the importance of monitoring institutional positioning for contrarian signals. When institutional bearishness clashes with retail optimism, the market often experiences sharp corrections or reversals-a dynamic that could play out in ZEC and ETH if short positions unwind.

Funding Rates and Market Sentiment: The Hidden Leverage

Funding rates on Hyperliquid, which adjust perpetual contract prices toward spot prices, provide further insight into market sentiment. For ZEC, historical rates have occasionally turned negative (e.g., -0.0016%), reflecting bearish bias. ETH's funding rate of 0.00125% (10.95% APR) indicates a cost of carry for long positions, favoring short sellers. These metrics, combined with the platform's explosive growth-a $320 billion in perpetuals trading volume in July 2025-underscore Hyperliquid's role as a barometer for institutional-grade sentiment.

Contrarian Opportunities: Where to Look

The data points to three key areas for contrarian strategies: 1. ZEC's Volatility: The asset's short position has shown resilience despite losses, suggesting a potential rebound if the price stabilizes. 2. MON's Regulatory Uncertainty: Institutional shorting could reverse if privacy coins gain regulatory acceptance. 3. ETH's Short Profitability: The ETH short's 140% gain raises questions about whether the position is overextended, creating a setup for a long-biased trade.

Investors should also monitor Hyperliquid's funding rate API and whale activity for real-time signals. For instance, the ZEC short's recent margin additions and ETH's unrealized gains indicate active management, which could foreshadow a shift in market dynamics.

Conclusion

The strategic shift in bearish crypto trading on Hyperliquid reflects a maturing market where institutional-grade shorting activity provides actionable insights. While ZEC and MON face institutional skepticism, ETH's profitability highlights the importance of balancing bearish and bullish narratives. For contrarian investors, the key lies in leveraging these divergences to identify mispricings and capitalize on market sentiment shifts.