Bitcoin’s aggressive rebound has devastated crypto stock short traders, inducing over $2.6 billion worth of losses for short sellers in less than three months, according to a new report from financial data firm S3 Partners.
Since September 11, when Bitcoin fell to a three-month low of $25,152, the coin has skyrocketed a dramatic 75%, to a current price of $43,924. Crypto stocks have similarly followed suit—clearly taking short sellers by surprise.
Stocks like Coinbase and MicroStrategy tend to move with the broader crypto market, and have undoubtedly received massive bumps from BTC’s improving fortunes. Coinbase stock is up 51% in the last month alone, to $143.63 at writing. MicroStrategy, which owns approximately $6.6 billion worth of Bitcoin, is up 82% since October to $568.88.
Thanks to those massive upswings, crypto stock short traders are down $2.656 billion in the last three months. Over 50% of those losses were incurred on shorting Coinbase stock; another 25% of the sum evaporated shorting MicroStrategy stock.
Since January, when BTC was worth almost a third as much as it is today, crypto stock short sellers have lost roughly $6.05 billion.
And fortunes for these crypto doubters are only getting worse, not better. On Tuesday, in just 24 hours, crypto short sellers lost over $387 million, according to S3. The firm estimates that these conditions have set the table for a substantial short squeeze—an event where poor-performing short sellers buy up stocks to cover their losses, further pushing those stocks’ prices higher.
Much of Bitcoin's recent momentum can be attributed to rising optimism that the Securities and Exchange Commission (SEC) will soon approve a spot Bitcoin ETF—a financial product that would allow traditional financial institutions and investors to gain exposure to Bitcoin without holding any cryptocurrency. Analysts have estimated that a Bitcoin ETF could infuse crypto markets with over $1 trillion in new investment.
But rising tides in crypto haven’t exclusively benefited Bitcoin. In recent weeks, altcoins like Ethereum and Solana, meme coins like PEPE and BONK, and NFTs across the board have all shown notable resurgences.
Edited by Stacy Elliott and Andrew Hayward