Crypto Short Sellers Lose $6 Billion as Bitcoin’s Rally Continues
Short sellers in the crypto industry have suffered significant losses of at least $6 billion this year due to Bitcoin’s impressive rally. Research firm S3 Partners reported that traders who bet against publicly traded crypto firms like Coinbase, MicroStrategy, and Marathon Digital are now facing $6.05 billion in paper losses. The majority of these losses occurred in the last three months as short sellers increased their exposure when they believed the sector was overbought.
Bitcoin’s Impact on Share Prices
Bitcoin’s 161% year-to-date rally has been a major driver for the share prices of crypto firms. Coinbase and MicroStrategy experienced growth of 312% and 285% respectively during the same period. Currently trading at $43,964, Bitcoin’s recent rally is attributed to the growing anticipation of a potential spot Bitcoin ETF approval in January.
Biggest Losers: Coinbase and MicroStrategy
Coinbase has been the most challenging trade for short sellers, resulting in over $3.5 billion in losses. MicroStrategy follows closely behind with short sellers losing more than $1.7 billion. Despite these growing losses, some short sellers continue to add to their positions, betting that the current rally will soon come to an end. Since Bitcoin’s mid-September bounce, an additional $697 million in new short positions have been added.
Hot Take: Short Sellers Face Major Losses in Crypto Industry
The strong rally of Bitcoin and other cryptocurrencies has proved detrimental to short sellers in the crypto industry. With losses exceeding $6 billion, these traders are struggling against the surge in share prices of publicly traded crypto firms. While some short sellers remain hopeful that the rally will lose momentum, it remains to be seen whether Bitcoin’s upward trajectory will continue or experience a correction in the near future.
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