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

Since March, short sellers who have bet against MicroStrategy have lost $1.92 billion. Short selling in the crypto markets has risen in the past few weeks. MicroStrategy has been leading all these losses in crypto short selling the past week as well.

MicroStrategy Leads Short Selling Losses

According to Reuters, data from S3 Partners shows that since March, short sellers betting against MicroStrategy, have lost $1.92 billion, underscoring the blow from a rise that has helped the company beat bitcoin. The Securities and Exchange Commission (SEC) approved multiple spot bitcoin exchange-traded funds (ETFs) in January, bringing the once-unpopular asset class closer to the mainstream.

Using the short-selling approach, traders bet on the potential decline of a financial instrument. Short sellers speculate on and profit from a decline in the value of an asset. Investors and portfolio managers may utilize short selling as a hedge against the downside risk of a long position, or traders may use it for speculation.

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Crypto Short Selling Losses Last Week

For cryptocurrency stocks, the average crowded score—a gauge of how closely spaced out short sellers are in stock—is 57.34, far higher than the street average of 32.41. The possibility for a quick squeeze is indicated by the squeeze scores, which average 78.69, significantly higher than the street average of 34.41. According to analysis, the companies in the industry most vulnerable to squeezes are MicroStrategy, Coinbase, and Cleanspark Inc.

The overall amount of short interest in the industry has grown by $3.67 billion to $10.71 billion in 2024. This suggests that short sellers are still skeptical or are hedging strategically. The sector’s total short interest has climbed by $4.50 billion in the previous 30 days, indicating that the recent gain has prompted increased short selling.

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