Bitcoin’s Massive Rally Has Short Selling to $6 Billion This Year: S3 Partners

adminDecember 7, 2023

Cryptocurrency industry short-sellers have lost at least $6 billion since January 1st of this year while trying to bet on publicly traded cryptocurrency companies due to the massive rally in Bitcoin (BTC).

Traders betting on publicly traded cryptocurrency companies, including Coinbase, MicroStrategy and Marathon Digital, are now worth $6.05 billion, according to a December 5 report from research firm S3 Partners. is incurring a book loss.

Most of short sellers’ losses have been concentrated in the last three months. After Bitcoin fell to a quarterly low of $25,133 on September 11, short sellers increased their exposure to what they consider to be overbought sectors.

Unbeknownst to short-selling traders, Bitcoin rallied 77%, reaching a yearly high of $44,481 on December 5, according to Cointelegraph price data. This rapid rise caused short sellers to lose approximately $2.65 billion.

*Total losses for short sellers in cryptocurrency-related stocks year-to-date. Source: S3 Partners*

“Buying in some of the most shorted cryptocurrency stocks such as Coinbase Global, MicroStrategy, Marathon Digital Holdings and Riot Platforms will help push the stock higher, along with long-term buying that has driven the stock higher since late October.” wrote S3 managing director, forecast analyst Ihor Dusaniwsky in the report.

Related: CME’s Bitcoin futures open interest is nearing an all-time high for 2021.

Bitcoin’s 161% year-to-date rise has been a significant driver of cryptocurrency company stock prices, with Coinbase and MicroStrategy growing 312% and 285%, respectively, over the same period.

*Bitcoin’s massive rally has boosted the prices of publicly traded cryptocurrency companies. Source: TradingView*

Bitcoin is trading at $43,964 at the time of this writing, and the recent rally is driven by growing expectations about the possible approval of a Bitcoin ETF in January.

Coinbase was the biggest loser for short sellers, with the company’s nearly 290% rally costing short sellers more than $3.5 billion. In just two seconds, MicroStrategy’s growth cost short sellers more than $1.7 billion.

Despite mounting losses, some short sellers continued to add to their positions, betting that the current rally would soon run out. Since Bitcoin rebounded in mid-September, $697 million in new short positions have been added.

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