Shorting bitcoin companies proves to be golden move for investors

Last Updated: 19 June 2022

Research by S3 Partners shows that going short on crypto companies yielded the most profits in any sector of the stock market.

Short the ponzi

Investors made 126% profit in 2022, and those who went short on stocks this year made massive profits in 2022. Data analytics firms conducted research into the most lucrative sectors. On average, American short-sellers are more than 30% ahead in 2022.

Highly profitable share categories are the automotive industry (54% profit), tech stocks (50% profit), while the media and retail sectors have also been strong performers (46% gain). But all these sectors are in stark contrast to crypto stocks, which made 126% profit from short positions.

Or, as imentioned in S3’s video: “None of these sectors even come close to the crypto sector, 126% profit on a short interest of $3 billion.”

Coinbase, Marathon and MicroStrategy

With a short position, investors speculate on price declines. By selling a stock that you don’t have at the time, you borrow the stock, and you can make a profit by actually buying the stock the moment the price has dropped. The short interest here is the value of the shares that short investors have outstanding. The higher the short interest, the more speculation there is on a (further) fall of the crypto shares.

Investors who went short on shares of mining companies, crypto exchanges, or companies with large amounts of bitcoin or other cryptocurrencies on their balance sheets more than doubled their capital in six months.

Coinbase, Marathon Digital Holdings (a miner), and MicroStrategy shares made significant gains. Coinbase shares fell 79% in 2022, and the company is laying off a large portion of its staff and no longer hiring new staff, even if an employment contract has already been signed. Marathon is also down 80% in 2022 and MicroStrategy by 77%.

S3 notes that there is now so much shorting going on in the crypto sector that the shares to borrow are starting to run out.

  • Ivan Brightly

    Ivan Brightly is a leading cryptocurrency analyst and author with over 5 years of experience in the blockchain and digital asset space. He previously served as a senior analyst at a major cryptocurrency hedge fund where he led quantitative research and trading strategy development.

    Ivan holds a Master's degree in Finance from the London School of Economics and a Bachelor's in Computer Science from Stanford University. He is frequently invited to speak at fintech and blockchain conferences worldwide on topics spanning cryptocurrency trading, blockchain technology, and the future of digital assets.

    Ivan's commentary has been featured in several major finance and technology publications including Forbes, Bloomberg, and CoinDesk. He is considered one of the most insightful voices analyzing new developments in the cryptocurrency and blockchain industry.

error: Alert: Content is protected !!