Short traders' bets on crypto stocks have reached $11 billion following this week's rally in the crypto market. Despite the market turnaround, total investment in crypto stocks has continued to rise this year, according to a Bloomberg report.
virtual currency stocks Assets held by companies with significant exposure to Bitcoin, other cryptocurrencies, or blockchain technology that may decline in value due to market activity.
With the stakes increasing, these companies now have paper losses of $6 billion, and their position looks pretty sure. According to the report, over 80% of short positions are in MicroStrategy (MSTR) and Coinbase (COIN). MicroStrategy remains bullish on Bitcoin, with Chairman Michael Saylor predicting a net record high for the asset. At the time of writing, the company said: 214,246BTC worth approximately $13.5 billion, as Mr. Saylor claims.Bitcoin is winning”
Meanwhile, Coinbase stock has also been affected by factors such as the bull market since its debut on the Nasdaq market in 2021. Ihor Dusaniowski pointed out that Coinbase stock may be looking for a rebound against the current market trend.
“Short sellers of crypto stocks are shorting in rising markets, either looking to bounce back from Bitcoin's rise or using their short positions as a hedge against their actual Bitcoin holdings. ”
Cryptocurrency stocks soar
At the time of writing, digital assets are on the rise, with Bitcoin trading at over $69,000 and reaching a market capitalization of $2.6 trillion. Bitcoin and other major assets are up more than 7% weekly, increasing the value of crypto stocks.
MSTR is up 115% in the past 30 days, trading at $1,876, while COIN is up 33% over the same period, trading at $266. The stock prices of some listed miners are also Bitcoin halving.
Market cycles affect traders
Traditionally, cryptocurrency markets have bullish and bearish cycles driven by macroeconomic and industry factors. A prime example is the 2021 bull market, when Bitcoin and other assets hit new all-time highs. The following year was marked by a sharp decline in Bitcoin prices caused by the collapse of the Terra ecosystem and the subsequent decline of his FTX.
As a result, some assets lost more than 50% of their value, leading to a decline in crypto stocks. Short sellers are eyeing a downturn in the market and hoping that the current buzz around cryptocurrencies will fade.
Also read: CFTC classifies Ethereum and Litecoin as products in KuCoin case
