Block Is The Most Shorted Crypto Stock: How Do Coinbase, Microstrategy Compare?

Block Inc SQ are down 59.8% year-to-date in 2022 amid crypto winter, and short sellers have made a killing betting against the stock.

Crypto stock weakness has generated big profits for short sellers overall in 2022, and Block is among many crypto stocks that have been home run trades for short sellers so far this year.

The Numbers: Crypto stocks have $5 billion in total short interest. S3 Partners analyst Ihor Dusaniwsky said Thursday that crypto stock short sellers have generated huge year-to-date mark-to-market profits on Block and several other top crypto stocks, including $469 million in profits so far in November.

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"Sam Bankman-Fried’s failed crypto exchange FTX.com and resulting bankruptcy has thrown crypto-currencies and the crypto industry into a volatile cycle of price movement," Dusaniwsky said in a report.

Block remains the most popular short target among crypto stocks with $1.9 billion in short interest. Coinbase Global Inc COIN is a close second with $1.5 billion in short interest followed by MicroStrategy Inc MSTR with $3.17 billion.

When it comes to short interest as a percentage of free float, S3 says Microstrategy is the crypto stock leader at 34% followed by Marathon Digital Holdings Inc MARA at 30.7% and Bakkt Holdings Inc BKKT at 21.1%.

Most Profitable Crypto Stock Shorts: Coinbase tops the group when it comes to the most profitable 2022 shorts among crypto stocks. Year-to-date, short sellers of Coinbase have generated $1.5 billion in profits followed by Microstrategy with $685.4 million in profits and Block with $339.2 million in profits.

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Dusaniwsky said crypto stock short sellers have generated an overall gain of 89.5% year-to-date, including a 9.5% gain in November.

Here are the five most profitable crypto stock shorts of November (to date):

• Microstrategy, $285.6-million profit
• Coinbase, $228.7-million profit
• Marathon Digital, $107.8-million profit
• Silvergate Capital Corp SI, $72.7-million profit
• Robinhood Markets Inc HOOD, $41.2-million profit

Benzinga's Take: Given the chaos and contagion uncertainty in the crypto market following FTX's downfall, it's baffling that Bitcoin BTC/USD prices are down less than 2% in the last week. If Bitcoin and other crypto prices start to nosedive to new lows in the weeks ahead, crypto stock short sellers could be adding millions more to their year-to-date profits.