[Suffered a $2 billion hit, short losses hit the highest since March]
Investors shorting MicroStrategy have suffered $1.92 billion in losses since March, making the company the biggest short-selling loser in the crypto market in recent weeks.
According to Reuters, data from S3 Partners showed that due to price increases in the cryptocurrency market, especially after multiple spot Bitcoin exchange-traded funds (ETFs) received approval from the U.S. Securities and Exchange Commission (SEC) in January this year, MicroStrategy short traders suffered significant losses.
Short trading is a strategy in which investors bet that the price of an asset will fall, with the aim of profiting from the fall in the asset's value. This strategy is not only used to hedge risks, but is also commonly used for speculation.
Cryptocurrency stocks have seen a significant increase in short trading losses in recent weeks. The average crowding score is as high as 57.34, which is much higher than the average level, indicating a high concentration of short traders. MicroStrategy, Coinbase and Cleanspark Inc are among the most vulnerable companies right now.
In 2024, total short interest in the cryptocurrency industry increased to $10.71 billion, a growth of $3.67 billion. This reflects that short traders remain skeptical of the market or are strategically hedging. Short interest in the industry has grown by $4.5 billion in the past 30 days, showing that recent market gains have fueled an increase in short trades.