Jun 16, 2022 03:40AM ET
By: AnalysisWatch
According to financial and analytics firm S3 Partners, short sellers have made roughly a 126% gain in cryptocurrency market value this year, far outpacing other sectors, despite risk sentiment in the broader stock market.
The fall in the world's biggest cryptocurrency, bitcoin, which has fallen to $21,229 from its record peak of $69,000 hit in November, and other major players such as cryptocurrency exchange operator Coinbase Global, has set the stage for what has been nicknamed "crypto winter".
According to S3, short sellers betting on the sector's stock decline have an average short interest of $3 billion.
By comparison, short sellers' gains in the software and services and media and entertainment sectors have been about 50% and 46%, respectively, so far in 2022.
The stocks of Coinbase and software developer Microstrategy Inc. have fallen 78.6% and 69% so far this year, respectively. The proportion of short positions in free float was 15% for Coinbase and 27.5% for Microstrategy, according to S3.
"Shorting cryptocurrency stocks can still be a profitable business," said Ihor Dusaniwsky and Matthew Unterman of S3 Partners. "Short sellers shouldn't be accused of short-term price drops, but they can actively participate in future recoveries."
According to S3 Partners, there has been $71 million worth of new short selling in cryptocurrencies so far this month.