Bitcoin, the largest digital asset by market value, continued to trade above $44,000 Wednesday.
Bitcoin has held onto its rise this week, but that’s the bad news for those who bet against it.
Tweet on BTC rally
— The_Journalbiz (@the_journalbiz) December 6, 2023
Optimism that exchange-traded funds based on actual bitcoin, rather than futures tied to the digital currency, will soon be approved have buoyed the cryptocurrency.
Bitcoin’s blistering rally in 2023 has made betting against cryptocurrency company stocks a losing bet for short sellers.
Traders betting on declines in crypto-related companies such as Coinbase Global Inc., MicroStrategy Inc. and Marathon Digital Holdings Inc. have accumulated paper losses of $6 billion so far this year, according to data from S3 Partners LLC.
Bitcoin’s more than 165% jump is driving the gains in crypto stocks, which are highly linked to the price of the digital asset. Hopes of further regulatory clarity and that a US-listed Bitcoin exchange traded fund is on the horizon have also lifted the sector this year.
“Buying-to-cover in the most shorted crypto stocks such as Coinbase Global, MicroStrategy, Marathon Digital Holdings and Riot Platforms will help push stock prices higher along with the long buying that has driven up stock prices since the end of October,” Ihor Dusaniwsky, managing director of predictive analytics at S3, said in a Dec. 5 report.
Coinbase has contributed the most pain to short sellers betting against the sector this year. The company’s 290% rally has amounted to about $3.5 billion in losses, more than half of the total shed so far in 2023. MicroStrategy, which is up more than 300% this year, has added $1.4 billion to crypto short losses this year.