Short sellers in the crypto industry have lost at least $6 billion this year trying to bet against publicly traded crypto firms, largely due to Bitcoin (B T c) Big rally from January 1.
As of December 5th report From research firm S3 Partners, traders who bet against publicly traded crypto firms like Coinbase, MicroStrategy and Marathon Digital are now facing $6.05 billion in on-paper losses.
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 believed to be overbought territory.
Unbeknownst to traders loading up on shorts, Bitcoin will rally 77% to a new yearly high of $44,481 on Dec. 5, according to Cointelegraph. data, This rapid increase resulted in losses of approximately $2.65 billion to short sellers.
“Buying in the most undervalued crypto stocks like Coinbase Global, MicroStrategy, Marathon Digital Holdings and Riot Platforms will help lift stock prices, with long buying also driving stock prices higher since late October.” S3 managing director of predictive analyst Ihor Dusanievsky wrote in the report.
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Bitcoin’s 161% year-to-date rally has been a significant driver for crypto firms’ share prices, with Coinbase and MicroStrategy rising 312% and 285% respectively within the same time frame.
At the time of writing, Bitcoin is trading at $43,964, with the recent rally driven by growing anticipation of potential spot Bitcoin ETF approval in January.
Coinbase is the most failed trade for short sellers, with the company’s nearly 290% rally resulting in short sellers losing over $3.5 billion. In second place, MicroStrategy’s growth has led to short sellers losing more than $1.7 billion.
Despite mounting losses, some short sellers have continued to add to their positions, betting that the current rally will soon run out of fuel. Since Bitcoin’s surge in mid-September, $697 million has been added to new short positions.
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