If last year those who invested in cryptocurrencies obtained exponential profits that no other asset class was able to provide, in 2022 the investors who bet on the market’s fall, establishing short positions in shares of companies in the sector, are the ones who have guaranteed the best yields so far, says a Bloomberg report published on Tuesday 21.
Trading short positions is a strategy also known as short selling, which consists of selling a stock that the investor does not have in his portfolio. Thus, it is necessary to rent the shares to sell them and then buy them back at a lower price before returning them to their owner, pocketing the profits of the operation.
It’s true that everyone who has sold short-term risky assets this year has made a profit, but investors who bet on falling shares of cryptocurrency companies are posting returns of up to 130%, according to data compiled by S3, an American company specialized in data analysis of the technology sector.
By way of comparison, short positions in shares of software and automotive companies generated, on average, a 50% return for short-term investors, while bets against shares of giants in the retail, media and communication and entertainment, produced an average of 46%.
Stocks linked to the crypto industry have led the losses so far, reflecting the overall state of the crypto market. Bitcoin (BTC) and Ethereum (ETH), the two largest cryptocurrencies in terms of market capitalization, have accumulated losses of 56.82% and 70.84%, respectively, since the beginning of 2022.
For its part, the shares of the cryptocurrency exchange Coinbase have depreciated almost 80%, while those of MicroStrategy, responsible for GBTC (Grayscale Bitcoin Trust), have fallen 56.69%, matching the losses of Bitcoin.
Not by chance, Coinbase and MicroStrategy concentrate the largest volume of short positions in the market. The swap represents $1.38 billion, meaning that 15% of the company’s outstanding shares are tied to short positions. While MicroStrategy has 537 million dollars, 27% of its total shares available on the market.
Below them are three publicly traded Bitcoin mining companies: Marathon Digital, Riot Blockchain, and Hut 8 Mining. No other sector compares to crypto in terms of volume of positions sold, according to data from S3.
Bitcoin in the spot market
Back to the market cryptocurrenciesBitcoin is trading flat in the early afternoon of Thursday the 23rd. Trading at $20,320, it records an intraday high of 1.1%, according to data from CoinGecko.
However, traders are waiting for the expiry of Bitcoin options, which amount to $2.25 billion, this Friday, the 24th, to gather evidence on the direction of the market in the short term.
The bears need to push the price below $20,000 on June 24 to lock in a $620 million profit. On the other hand, the best case scenario for the bulls calls for a bounce back above $22,000 to cut losses by $140 million. Therefore, further declines below the $20,000 support cannot be ruled out just yet, as Cointelegraph recently reported.
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