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Investors betting against crypto stocks have lost almost $2 billion this year as bitcoin breaks records

Phil Rosen   

Investors betting against crypto stocks have lost almost $2 billion this year as bitcoin breaks records
  • Investors shorting crypto-linked stocks have lost $1.9 billion in 2024, data from S3 shows.
  • Total short interest in sector names including MicroStrategy and Coinbase is at $10.7 billion.

Investors betting against stocks tied to the cryptocurrency market have lost $1.9 billion so far this year, according to data from S3 Partners.

While bitcoin has touched new records in 2024, total short interest in stocks in the crypto sector has piled up to about $10.7 billion.

"Bitcoin is up over 7% in late-day trading [Monday] and up almost 12% since its recent low three days ago and as a result crypto related stock short sellers have incurred -$1.9 billion to their year-to-date mark-to-market losses today," S3 managing director of predictive analytics, Ihor Dusaniwsky, wrote in the report.

Michael Saylor's MicroStrategy and crypto exchange Coinbase account for 84% of the $10.7 billion of short interest, at $5.52 billion and $3.46 billion, respectively.

Marathon Digital ($764 million) and Riot Platforms ($353 million) follow those two names.

Crypto stocks are down $1.9 billion in mark-to-market losses, and crypto-related shorts are down $4 billion for the month of March and $5.7 billion year-to-date, the report said.

Total short interest in the sector, S3 data shows, has climbed by $3.67 billion this year, and short-sellers have piled in despite bitcoin's strong gains.

The SEC approved 11 spot bitcoin ETFs in January, ushering in a flood of fresh demand into the sector. At the same time, markets are bracing for the April halving event, which experts say could deliver a supply shock for bitcoin.

In February, the total market cap for cryptocurrencies breached $2 trillion for the first time in nearly two years.

S3 said crypto-related stocks look "extremely crowded" and "very squeezable" relative to the US market.

"Crypto stock short sellers have been selling into a rallying market – either looking for a pullback in the Bitcoin rally or using the short positions as a hedge versus actual Bitcoin holdings," Dusaniwsky added.




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