tl;dr
Bitcoin's Surge and the Short Selling Surge Despite a significant uptick in Bitcoin's price, short sellers remain skeptical of cryptocurrency-linked stocks and have bet billions on their downturn. This year, short interest in the sector has reached $11 billion, primarily targeting MicroS...
Bitcoin's Surge and the Short Selling Surge
Despite a significant uptick in Bitcoin's price, short sellers remain skeptical of cryptocurrency-linked stocks and have bet billions on their downturn. This year, short interest in the sector has reached $11 billion, primarily targeting MicroStrategy Inc. and Coinbase Global Inc. Short sellers have faced paper losses nearing $6 billion despite Bitcoin's gains. Several stocks, including MicroStrategy, Coinbase, and Cleanspark, are susceptible to short squeezes, and over $190 million worth of positions have been liquidated in the last 24 hours, with most being long positions.
The increase in short selling is a strategy some investors employ to either anticipate a “pullback” in Bitcoin’s rally or hedge against direct Bitcoin investments. The persistence of short sellers in targeting crypto-linked stocks poses risks if the market does not align with their bearish forecasts. Several stocks within this sector, including MicroStrategy, Coinbase, and Cleanspark Inc., are identified as susceptible to short squeezes, posing additional pressure on other short sellers.
Amid these market dynamics, the broader cryptocurrency sector has also seen substantial liquidations. Data from Coinglass indicates that over $190 million worth of positions have been liquidated in the last 24 hours alone. Most of these liquidations were long positions, accounting for approximately 61.45%. Coinciding with a slight retracement in Bitcoin’s price from its 24-hour high above $71,000 to a current trading price of $69,879, these market fluctuations underscore the volatility of the cryptocurrency market.
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