Traders are making bank short selling crypto.

Software company MicroStrategy was the most profitable short trade in dollar terms out of the entire stock market over the last three months, according to a new report from financial data firm S3 Partners.

Short sellers are up almost 23% on MicroStrategy, a company known for its large holding of Bitcoin, the report found. With short interest nearing $5 billion, that’s a $1.1 billion payday for bears.

And crypto exchange Coinbase wasn’t far behind. Ranked as the sixth most profitable short of the second quarter, short sellers were up 20%, or $500 million, out of a $2.4 billion position.

Investors who are optimistic about a company’s prospects can simply buy its stock with the hopes of selling it for a higher price at a later date — which is called going long.

Short sellers, however, take on leverage to sell a stock at the market price with the promise of buying it back later. If the stock’s price is lower when they buy it back, they make a profit, but if it’s higher, they take a loss.

Short interest in the US markets increased 5.1% in the second quarter, by almost $58 billion, reaching $1.2 trillion.

The least profitable short, in dollar terms, was chipmaker Nvidia, whose stock rose 48% in the second quarter.

At almost $30 billion in short interest, Nvidia is also the most shorted firm on the market — way ahead of runner-ups Microsoft or Apple, which have $22 billion and $20 billion in shorts, respectively.

Bears are down 31% on Nvidia, and have lost a staggering $9.4 billion.

But there is still hope for them yet. Mike Wilson, Morgan Stanley’s chief US equity strategist, told Bloomberg on Monday that he expected a big drawdown across the market in the next three months.

“The chance of a 10% correction is highly likely sometime between now and the election,” Wilson said, citing uncertainty about earnings, the elections, tariffs, immigration, and the Federal Reserve’s monetary policy.

“It’s going to be choppy,” he said. “Right here, valuations, to me — very unexciting.”

Tom Carreras is a markets correspondent for DL News. Got a tip about short sellers and crypto? Reach out at tcarreras@dlnews.com