Author:
Ihor Dusaniwsky
Managing Director of Predictive Analytics, S3 Partners
Matthew Unterman
Director of Predictive Analytics, S3 Partners
BlackRock Inc (BLK) announced a partnership with Coinbase Global Inc (COIN) that will allow its institutional investors cryptocurrency trading capabilities, specifically bitcoin at this time, through Coinbase Prime. In addition to trading, clients will also have access to Coinbase’s Aladdin product for custody and prime brokerage functionality. COIN’s stock price soared over +40% to $115/share at the open and is now trading at over +15% in midday trading.
COIN short interest is $2.41 billion, 29.80 million shares shorted, 20.07% SI % Float, 16.72% S3 SI % Float (which includes the synthetic longs created by every short sale in the trade float denominator) and a stock borrow fee of 4.07% fee. COIN is the 36th largest short in the U.S. market but is the 4th largest short in the Financial Sector, behind S&P Global (SPGI) and Citigroup (C) but ahead of Bank of America (BAC), JPMorgan Chase (JPM) and Berkshire Hathaway (BRK/B).
Name
Ticker
SI % Float
S3 SI % Float
Fee
Short Interest
S&P GLOBAL INC
SPGI
2.25%
2.20%
0.30%
$2,875,250,077
TORONTO-DOMINION BANK
TD
2.14%
2.09%
0.30%
$2,515,473,572
CITIGROUP INC
C
2.49%
2.43%
0.30%
$2,494,012,839
COINBASE GLOBAL INC
COIN
20.07%
16.72%
4.07%
$2,408,280,145
BANK OF AMERICA
BAC
0.89%
0.88%
0.30%
$2,402,520,358
JPMORGAN CHASE CO
JPM
0.66%
0.65%
0.30%
$2,174,824,755
BERKSHIRE HATHAWAY B
BRK/B
0.57%
0.56%
0.30%
$2,141,673,294
T ROWE PRICE GRP
TROW
7.38%
6.88%
0.30%
$2,082,899,654
BANK OF NOVA SCOTIA
BNS
2.77%
2.70%
0.30%
$2,025,511,644
GOLDMAN SACHS GRP
GS
1.62%
1.59%
0.30%
$1,839,629,806
BLACKROCK INC
BLK
1.44%
1.42%
0.30%
$1,491,329,545
MORGAN STANLEY
MS
1.28%
1.26%
0.30%
$1,483,488,282
WELLS FARGO & CO
WFC
0.89%
0.88%
0.30%
$1,476,444,721
BLACKSTONE GRP LP
BX
1.97%
1.93%
0.30%
$1,384,256,000
ROYAL BANK OF CANADA
RY
0.92%
0.91%
0.30%
$1,264,648,061
AMERICAN EXPRESS CO
AXP
1.06%
1.05%
0.30%
$1,235,853,928
APOLLO GLOBAL MANAGEMENT INC
APO
4.71%
4.50%
0.30%
$1,160,121,234
SOFI TECHNOLOGIES INC
SOFI
21.10%
17.42%
1.57%
$1,139,753,648
CIBC
CM
2.44%
2.38%
0.30%
$1,111,636,204
VOYA FINANCIAL
VOYA
17.85%
15.14%
0.30%
$1,102,306,351
We have been seeing active short covering in COIN over the last thirty days with 2.80 million shares, worth $226 million, bought to cover. This is a -8.6% decrease in the total amount of COIN shares shorted as its stock price soared +65% (prior to today). A classic technical short squeeze.
COIN shorts are down -$363 million in mark-to-market losses on today’s +15.1% midday spike in stock price. At the open, when COIN’s stock price topped $115/share, short sellers were down over $1 billion in mark-to-market losses but have recouped nearly two-thirds of those losses as COIN’s stock price settled into a $92-$97 price range.
COIN short sellers are still up $1.00 billion in year-to-date mark-to-market profits, a +71% return on a short interest of $1.41 billion.
With today’s losses COIN short sellers are already down -$492 million of mark-to-market losses in the first few days in August, down -26% on an average short interest of $1.90 billion. This follows a losing month in July, when COIN short sellers were down -$548 million in month-to-date mark-to-market losses, down -30% on an average short interest of $1.85 billion.
COIN is a relatively crowded short, scoring a 72.50/100.00 in our Crowded Score metric with SI % Float nearly four times greater than the U.S. average of 5.11% and a stock borrow fee of 4.07% versus a 0.95% for the average U.S. stock.
COIN was a solid squeeze candidate even before today’s price pop, but today’s move makes it a certain squeeze stock for many short sellers that have incurred significant mark-to-market losses over the last thirty and seven days.
COIN has a 100.00/100.00 squeeze score in our Squeeze Score metric, COIN short sellers were taking major body blows recently with mark-to-market losses of -53% over the last thirty days and -43% over the last week prior to today’s price move. BlackRock’s partnership announcement and subsequent +15% price move may be the knockout blow to put more short sellers on the canvass.
We expect continued short covering in COIN as the short squeeze not only continues but gets a stronger grip on short sellers. Forced buy-to-covers and continued long buying on the news should keep COIN at these elevated stock price levels in the near term.