Coinbase Stock Short Sellers Lost More Than $4.2 Billion In 2023

Key Points:

• Coinbase stock short sellers suffered heavy losses exceeding $4.2 billion as the exchange’s shares surged nearly 400%.
• Despite the setbacks, bearish investors maintain a $4 billion short interest rate, anticipating a stock collapse.

In a surprising twist, Coinbase stock short sellers faced substantial setbacks in 2023, grappling with losses exceeding $4.2 billion as the cryptocurrency exchange’s shares soared nearly 400%, as per reports from DLNews.

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Coinbase Stock Short Sellers Stagger with $4.2B Loss Amid Soaring Shares

Despite this financial blow, Coinbase stock short sellers remain undeterred, maintaining a short interest of about $4 billion, inclusive of an additional $1.3 billion since the close of November.

December brought no respite for Coinbase short sellers, as the shares surged over 40%, resulting in paper losses totaling $1 billion for the month. This trend mirrors a classic short squeeze scenario, where an abundance of short sellers in the market prompts a rapid increase in the stock’s price, compelling bearish traders to buy and cover their positions, consequently driving prices even higher.

The resilience of Coinbase‘s stock is attributed to factors intrinsic to its business model and a positive shift in overall market sentiment in 2023. Bitcoin’s remarkable 150% price increase played a crucial role, fueled by optimism surrounding the potential approval of a Bitcoin exchange-traded fund (ETF), a development that gained traction when major Wall Street players filed for regulatory approval starting in June.

A significant boost to Coinbase’s performance came with its role as the custodian for BlackRock, the world’s largest asset manager with over $9 trillion in assets under management. Pending approval from the US Securities and Exchange Commission, this marks a notable shift for Coinbase from a Prime Broker to a Prime Execution Agent.

In this capacity, Coinbase would primarily handle processing buy or sell orders for the ETF, aligning with the evolving landscape of the cryptocurrency market and Coinbase’s expanding role in facilitating institutional interests.