In a stunning twist of fate, Bitcoin’s bull run has led to a $2.6 billion blow for crypto short sellers in less than three months, as reported by financial data firm S3 Partners.
What Happened: Decrypt reported that Bitcoin’s value has escalated by 75% since September 11, rocketing from a three-month low of $25,152 to a high of $43,924. This unexpected surge has caught short sellers by surprise as crypto stocks have trailed a similar path.
Crypto stocks such as Coinbase and MicroStrategy have mirrored the broader crypto market’s performance, experiencing significant growth thanks to Bitcoin’s upward trajectory. In the past month, Coinbase’s stock has soared by 51% to $143.63, while MicroStrategy, a holder of approximately $6.6 billion in Bitcoin, has witnessed an 82% surge since October to $568.88.
These striking rallies have led to crypto short sellers facing losses of $2.656 billion in the last three months. Over half of these losses have been inflicted by shorting Coinbase stocks, with about 25% resulting from shorting MicroStrategy stocks.
Since January, when Bitcoin was valued at almost one-third of its current price, crypto short sellers have borne losses of roughly $6.05 billion. Just on Tuesday, these sellers lost more than $387 million, according to S3 Partners. The firm anticipates a significant short squeeze, a scenario in which struggling short sellers purchase stocks to offset their losses, thereby driving stock prices even higher.
Why It Matters: Bitcoin’s recent surge is attributed to the rising optimism that the Securities and Exchange Commission (SEC) will soon greenlight a Bitcoin ETF. This move would enable traditional financial institutions and investors to gain exposure to Bitcoin without the need to hold any cryptocurrency.
Read Next: If You Invested $1,000 In Dogecoin On Jan. 1, 2021, Here’s How Much You’d Have Now
Image via Shutterstock
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
