With the approval of the Bitcoin spot ETF, Bitcoin-related stocks have surged and started to be heavily shorted. However, data shows that since March, investors shorting Bitcoin have suffered losses of nearly $2 billion, with MicroStrategy being the major loser.
After the SEC approved the Bitcoin spot ETF in January, Bitcoin-related stocks skyrocketed. According to data from S3 Partners, investors shorting MicroStrategy have lost $1.92 billion since March. Investors shorting Coinbase and mining company CleanSpark have lost $593.5 million and $106.4 million respectively.
MicroStrategy’s stock price has risen over 128% this year, surpassing Bitcoin’s 60% increase. BTIG analysts stated in an April report that investors who want exposure to Bitcoin may not be able to directly invest in Bitcoin or ETFs, which has supported MicroStrategy’s premium performance. The company’s ability to raise funds to purchase additional Bitcoin is also a positive for shareholders.
MicroStrategy continues to implement its strategy of accumulating Bitcoin. The company currently holds 214,246 Bitcoins, accounting for 1% of the total Bitcoin supply. The cost of holdings is $7.53 billion, and the current value is $15.09 billion, with a floating profit of approximately $7.56 billion.
Previously, short-selling institution Kerrisdale Capital targeted MicroStrategy and released a research report last month criticizing the overvaluation of MicroStrategy’s stock price. They announced that they were shorting MicroStrategy’s stock, causing the stock price to drop more than 11% in a single day.
Despite the recent optimism in the cryptocurrency market, the cryptocurrency industry is still heavily shorted. Among the 9 most-watched companies related to cryptocurrencies, the short position has reached 16.73% of the total outstanding shares, more than 3 times the U.S. average.
The SEC remains skeptical of cryptocurrencies. Although the SEC approved the Bitcoin spot ETF, it does not mean that the SEC is willing to accept similar cryptocurrency products, such as Ethereum spot ETF.
Alan Konevsky, the Chief Legal Officer and General Counsel of online investment platform tZERO, stated that the approval of the Bitcoin spot ETF does not indicate a change in the SEC’s stance. He does not believe it is a sign of more good news to come.
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