With the approval of the Bitcoin spot ETF and the subsequent surge in Bitcoin-related stocks, a massive short-selling of Bitcoin has begun. However, data shows that since March, investors shorting Bitcoin have suffered losses of nearly $2 billion, primarily led by MicroStrategy.
In January of this year, after the SEC approved the Bitcoin spot ETF, Bitcoin-related stocks skyrocketed. According to S3 Partners’ data, investors shorting MicroStrategy have lost $1.92 billion since March. Additionally, 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 a report in early April that investors wanted exposure to Bitcoin and that these investors may not be able to invest directly in Bitcoin or the ETF. This has supported MicroStrategy’s premium performance, as the company’s ability to raise funds to purchase additional Bitcoin is favorable for shareholders.
MicroStrategy continues to implement its strategy of accumulating Bitcoin. The company currently holds 214,246 Bitcoins, which represents 1% of the total Bitcoin supply. The cost of the holdings is $7.53 billion, and the current value is $15.09 billion, resulting in a 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 also announced that they were shorting MicroStrategy’s stock, causing the stock price to plummet over 11% in a single day.
Despite the recent optimism in the cryptocurrency market, the cryptocurrency industry is still heavily shorted. Among the nine most-watched companies in the cryptocurrency sector, the short positions have reached 16.73% of the total outstanding shares, more than three times the US average.
The SEC remains significantly concerned about cryptocurrencies. Although the SEC approved the Bitcoin spot ETF, it does not indicate the SEC’s willingness to accept other similar cryptocurrency products, such as Ethereum spot ETF.
Alan Konevsky, Chief Legal Officer and Chief Compliance Officer of online investment platform tZERO, stated that the approval of the Bitcoin spot ETF does not signify a change in the SEC’s stance. He does not believe that it is a prelude to more good news to come.