‘Betting Against Bitcoin’ Costs Crypto Traders $6 Billion After Price Surge

Over the past few weeks, we have witnessed a remarkable rally in the price of Bitcoin (BTC). This surge not only resulted in crypto investors finally making big profits again, but it also had a significant impact on investors betting against this crypto sector; the so-called short sellers. These short sellers are expected to lose up to $6 billion by 2023, according to a recent report from research firm S3 Partners.

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Betting against BTC?

After hitting a low of $25,133 on September 11, Bitcoin appeared attractive to short sellers for a while. But contrary to their expectations, Bitcoin made a remarkable comeback, rising almost 80% since then. A little later an annual record was even set. This rapid increase has left short sellers with a painful loss of up to $2.65 billion.

The rise of Bitcoin not only has an impact on the crypto market, but also on the stocks of related companies. Research data shows that shares of companies such as Coinbase, MicroStrategy and Marathon Digital have risen significantly, by 312% and 285%, respectively. This growth is largely due to Bitcoin’s rally.

Coinbase has become one of the worst bets for short sellers. The company’s nearly 290 percent surge has resulted in losses of more than $3.5 billion for this group of investors. MicroStrategy follows close behind with losses of more than $1.7 billion for short sellers.

Short sellers don’t give up

Despite mounting losses, some short sellers continue to add to their positions as they expect the current Bitcoin rally to fade soon. Since Bitcoin’s revival in mid-September, $697 million in new short positions have been opened by traders who believe that BTC’s recent rally will not continue or that the price will at least make a major correction first.

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At the time of writing, Bitcoin price is at $43,100, a few percent below its peak earlier this month. Of course, what will happen now remains a mystery; only time will tell whether the short sellers are right and walk away with nice pocket money.

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