According to Cointelegraph: Short sellers in the crypto space have reportedly lost over $6 billion in 2023 due to betting against publicly traded crypto firms, mainly driven by Bitcoin's substantial rally since the start of the year. This is according to a report by S3 Partners published on Dec. 5.
Majority of the losses experienced by short sellers occurred in the last three months. When Bitcoin hit a quarterly low of $25,133 on Sept. 11, short sellers increased their exposure, believing they were facing an overbought sector. However, Bitcoin then staged a 77% rally leading to around $2.65 billion in losses for short sellers.
Coinbase, MicroStrategy, Marathon Digital, and Riot Platforms were among the most shorted crypto stocks. Year to date, Bitcoin’s 161% rally has significantly driven up crypto firm share prices, with Coinbase and MicroStrategy rallying 312% and 285%, respectively.
Coinbase has proven the most unsuccessful bet for short sellers, with the firm’s near 290% rally resulting in over $3.5 billion in losses for short sellers. MicroStrategy isn’t far behind, with its growth causing short sellers to lose more than $1.7 billion.
Despite ongoing losses, some short sellers have continued to increase their positions, wagering that the current rally will soon lose momentum. Since Bitcoin’s bounce back in mid-September, $697 million in new short positions have been introduced.
