MicroStrategy Takes a $2 Bln Hit With Highest Short Losses Since March

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Over the past three months, short sellers have experienced a loss of approximately $1.92 billion due to their bearish positions against MicroStrategy. The practice of short selling in the cryptocurrency sector has surged recently. Among all crypto assets, it is MicroStrategy that has caused the most significant losses for short sellers during the last week.

MicroStrategy Leads Short Selling Losses

Based on Reuters’ report, data from S3 Partners indicates that short sellers opposing MicroStrategy have suffered losses totaling $1.92 billion since March. This significant loss highlights the impact of MicroStrategy’s rise, which has enabled the company to outperform bitcoin. In January, the SEC gave its approval for several spot Bitcoin ETFs, moving the once-scorned asset class towards greater acceptance in the financial market.

With the short-selling strategy, traders place wagers that a financial instrument’s value will decrease. They make profits when the value of the asset they’ve sold short falls. Short selling is employed by investors and portfolio managers as a safeguard against potential losses on long positions or as a means for speculation.

Crypto Short Selling Losses Last Week

In simpler terms, the average distance between short sellers for cryptocurrency stocks is larger than usual, with an average crowded score of 57.34 compared to the average on the street of 32.41. This could mean a potential quick surge in price due to the high squeeze scores, which averaged 78.69 against the street’s 34.41. Based on analysis, MicroStrategy, Coinbase, and Cleanspark Inc. are among the companies in this industry that are more likely to experience such price surges.

In simpler terms, the value of bets placed against companies in the industry collectively increased from $7.04 billion to $14.32 billion throughout 2024. This implies that short sellers remain uncertain or are implementing protective strategies. The total amount of short positions within this sector has surged by $4.50 billion over the past month, suggesting a surge in short selling activity due to recent market gains.

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2024-04-10 22:33