Bitcoin is up over 7% in late-day trading and up almost 12% since its recent low three days ago and as a result crypto related stock short sellers have incurred -$1.9 billion to their year-to-date mark-to-market losses today.

Total short interest in crypto related stocks is $10.7 billion with MicroStrategy Inc (MSTR) and Coinbase Globa Inc (COIN) making up 84% of the short interest in the sector. Short interest % Float in this sector is over three times larger than the U.S. average of 5.13%

Crypto stocks are down $1.9 billion, -17.4%, in mark-to-market losses today with MSTR leading the pack with -$1.4 billion in mark-to-market losses. Crypto related shorts are down -$4.0 billion, -39.2%, for the month of March and down -$5.7 billion, -79.1%, year-to-date.

These crypto related stocks are extremely crowded and very squeezable relative to the U.S. market, with an average Crowded score of 57.34 versus the street average of 32.41 and an average Squeeze score of 78.69 versus the street average of 34.41. MSTR, COIN and CLSK and the most squeezable names in the sector.

We have seen net short covering in Crypto stocks, mainly due to COIN short covering more than offsetting the increased short selling we saw in MSTR for the year. Total short interest in the sector increased by $3.67 billion to $10.71 billion in 2024. This increase was made up of a $3.98 billion in the mark-to-market increase in the share price of the stocks shorted partially offset with $302 million of increased short covering.

Over the last thirty days, as Bitcoin rallied significantly, but we have seen increased short selling into this rally. Total short interest in the sector increased by $4.50 billion to $10.71 billion. This increase was made up of a $3.58 billion mark-to-market increase in the share price of the stocks shorted with an additional $925 million of new short selling, led by $974 million of increased short selling in MSTR.

Crypto stock short sellers have been selling into a rallying market – either looking for a pullback in the Bitcoin rally or using the short positions as a hedge versus actual Bitcoin holdings. For the trades that are risk positions, there is a strong squeeze possibility in the more unprofitable shorts in the sector like MSTR, COIN and CLSK. If the short exposure is a Bitcoin hedge, then short interest should remain relatively flat, regardless of the Bitcoin rally.

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