Bitcoin is up sharply this week, after Tesla
TSLA
Musk drove bitcoin price sharply higher as a long-running battle between bullish retailers, organized through Reddit’s WallStreetBets forum, and Wall Street hedge funds that have long been shorting GameStop stocks hit their peak – with regulators and brokers trying to calm the hectic markets with heavy-handed restrictions.
Now, data has been disclosed hedge funds are short on bitcoin to the tune of more than $ 1 billion, even as retailers pile on bitcoin and other cryptocurrencies.
Traders on Reddit’s WallStreetBets forum have been raising the price of GameStop shares in recent weeks. … [+]
STRF / STAR MAX / IPx
Hedge funds have increased their short positions in bitcoin – basically betting that the price of an asset will fall – since the bitcoin price started to rise in October, data from crypto news and analytics firm The Block showed.
The net short position in bitcoin futures is now the largest it has ever been, according to the latest report from the CFTC Traders in Financial Futures.
Bitcoin price has risen roughly 200% since October, to more than $ 40,000 per bitcoin before falling back slightly. The blistering bitcoin rally has been largely attributed to institutional investors heating up for the cryptocurrency and payment giants such as PayPal
PYPL
PYPL
adding their support – although the fear of bubbles has arisen.
While hedge funds are increasingly betting at the bitcoin price, hedging their long positions to some extent, retailers empowered by apps and bored by lockdowns on bitcoin and everything else speculate.
“Staying at home due to pandemic lockdowns and restrictions appears to have fueled an influx of day traders,” Frédérique Carrier, head of investment strategy at RBC Wealth Management, wrote in a note.
Investors’ attitudes are shaped by the gains from a number of high-profile issues. For example, bitcoin’s 35% gain in the first nine days of 2021, following a fivefold increase in price from March to December 2020; or the more than sixfold increase in GameStop shares in less than two weeks to January 26; or even Tesla, now the fifth largest stock in the S&P 500 by market capitalization, with a market capitalization greater than that of the major US, European, and Japanese automakers combined . “
Hedge funds have been shorting more and more bitcoin since the bitcoin price started to rise … [+]
The block
Brokerage eToro, after adding 5 million users in all of 2020, registered 1 million more in the first month of 2021 – suggesting that the demand for stocks and cryptocurrency trading is still growing among causal investors.
Meanwhile, many in the bitcoin and cryptocurrency community have been quick to encourage the idea that retailers frustrated by restrictions should turn to crypto.
“With Robinhood stopping trading in certain assets such as GameStop and Nokia and Nasdaq president and CEO Adena Friedman, who is calling for regulations to prevent retail investors from coordinating on social media, the case for cryptocurrencies is only getting stronger,” said Nicholas Pelecanos , head of commerce at blockchain platform NEM, said in email comments. “I think as a result of this debacle we will be witnessing a new wave of investors taking over bitcoin and other major crypto assets.”