Short trader bets against crypto stocks have hit $11 billion amid the rise in the cryptocurrency market this week. The total amount against crypto stocks this year continues to rise despite the upturn in the market, Bloomberg reported.
Crypto stocks are assets that companies that have significant exposure to Bitcoin, other cryptocurrencies, or blockchain technology such that the values may drop due to market activities.
With increasing bets, these companies currently have paper losses hitting $6 billion and look quite certain of their position. According to the report, more than 80% of short positions are on MicroStrategy (MSTR) and Coinbase (COIN). MicroStrategy remains bullish on Bitcoin with its Chairman Michael Saylor projecting net highs for the asset. At press time, the company holds 214,246 BTC worth approximately $13.5 billion as Saylor insists that “Bitcoin is winning.”
On the other hand, Coinbase stock is also influenced by factors such as a bull run since it made its NASDAQ debut in 2021. Ihor Dusaniwsky noted that may be looking for a pullback against the present market tide.
“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.”
Crypto Stocks Soar
At press time, digital assets are on an upward momentum with Bitcoin moving past $69,000 and the market capitalization at $2.6 trillion. Bitcoin and other top assets have made over 7% weekly gains raising the value of crypto stocks.
MSTR trades at $1,876, up 115% in the last 30 days while COIN exchanges hands at $266, up 33% in the same period. The stock of some publicly listed miners is also up with anticipation of the Bitcoin halving.
Market Cycles Influence Traders
Traditionally, the cryptocurrency market has bull and bearish cycles occasioned by macroeconomic and industry factors. A major example is the bull run of 2021 which saw Bitcoin and other assets hit new all-time highs. The following year was marked by a sharp fall in Bitcoin prices sparked by the implosion of the Terra ecosystem and the subsequent fall of FTX.
As a result, some assets lost over 50% of value leading to a decline in crypto stocks. Short sellers look to the market downturn and hope the current buzz in cryptocurrencies will fade.
Read Also: CFTC Classifies Ethereum and Litecoin as Commodities in KuCoin Case
The post Short Traders Bet $11 Billion Against Crypto Stocks Drive appeared first on CoinGape.
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