Bloomberg: $11 Billion Bearish Bet, Believing Crypto Concept Stocks’ Rally is Unsustainable

Bloomberg: $11 Billion Bearish Bet, Believing Crypto Concept Stocks' Rally is Unsustainable

Bloomberg: $11 Billion Bearish Bet, Believing Crypto Concept Stocks' Rally is Unsustainable

According to Bloomberg, the surge in Bitcoin prices has driven the rise of cryptocurrency-related stocks. However, short sellers are still betting billions of dollars that this rally will eventually end.

A report released on Monday (25th) by S3 Partners LLC shows that the total short interest (i.e., the amount of collateral pledged by reverse traders for cryptocurrency stocks) has increased to nearly $11 billion this year. Over 80% of the short interest in this industry is focused on betting against business intelligence software company MicroStrategy and cryptocurrency exchange Coinbase.

Due to Bitcoin’s over 65% increase since the beginning of the year, the group has accumulated nearly $6 billion in paper losses. Nevertheless, these investors are still adding to their short positions.

Ihor Dusaniwsky, Managing Director of S3’s Predictive Analytics, stated in the report:

In the past 30 days, traders betting on the decline of cryptocurrency-related stocks have increased their positions, especially against MicroStrategy. According to S3’s data, traders have invested $974 million in betting that the company will decline, surpassing the amount of short covering (reverse traders repurchasing stocks to exit positions) during this period for companies such as Coinbase, cryptocurrency mining companies Marathon and Hive Digital Technologies.

Source:
Bloomberg

S3’s data shows that the increase in short interest has driven up MicroStrategy’s short interest, accounting for over 20% of its total outstanding shares. Currently, the company is one of the most shorted stocks in the US market, comparable to larger companies such as Nvidia, Microsoft, and Apple. If short sellers’ bets on cryptocurrency-related stocks are incorrect, they may face even greater losses, with many stocks potentially experiencing a short squeeze.

Data source:
Bloomberg