Crypto Stocks Short Sellers Are up 89.58% YTD Following the FTX Collapse
Crypto stocks short sellers are turning a tidy profit in the wake of Sam Bankman-Fried’s FTX debacle. That’s according to a recent BanklessTimes.com report. The site has presented data indicating that crypto shorting investors are up 89.58% after the crypto exchange’s collapse.
FTX’s announcement that it had filed for bankruptcy on 11th November sent ripples through the crypto market. Bitcoin fell 4% to its lowest in two years, reaching lows of $15,586.94. Similarly, Ether, the second leading digital asset, shed 8% of its value, going to a low of $1,081.56. Other crypto suffered varying degrees of losses too.
Jonathan Merry, the CEO of BanklessTimes, spoke on the data: “The crypto market has entered a tumultuous cycle due to the insolvency of the failed crypto exchange FTX. Cryptocurrencies are a volatile investment, and short sellers thrive on this volatility to make gains. The uncertainties that FTX’s fall brought on the crypto market created the perfect opportunity for them to profit.”
Instabilities and Frauds Have Rocked the Crypto Industry
Besides the demise of FTX, this year has seen several other eruptions and frauds in the crypto industry. The unbelievable tales of worthless tokens masquerading as assets, the unanticipated withdrawal of billions of dollars in cash before declaring bankruptcy, the fraudulent halo surrounding Sam Bankman-Fried (AKA SBF), and FTX’s total lack of structure or organization have sent shockwaves throughout the world.
Following FTX’s downfall, the mood in the sector has worsened even further, as the firm was seen as having a steady presence.
Bitcoin’s price has fallen from roughly $69,000 to less than $17,000 in the past year. Bitcoin’s price movement is widely used as a barometer of emotion in the crypto market.
Similarly, crypto-focused stocks have taken a sound beating. For instance, MicroStrategy’s stock price is down 70% from where it was at the beginning of the year. Likewise, Silvergate and Coinbase are down over 80%. Also dwindling is the optimism of Wall Street experts on the stock.
That said, the FTX-inflicted chaos largely left traditional U.S. stocks unaffected. They traded upwards on the back of softer-than-expected inflation data, which gave investors hope.
The failure of TerraUSD earlier this year had a domino effect on several enterprises. It contributed to the collapse of a significant hedge fund, Three Arrows Capital.
Like TerraUSD, FTX’s fall will likely have a ripple effect on the exchange’s affiliated companies.. Hackers preyed on the firm and stole about $477 million worth of crypto assets. FTX has acknowledged that “unauthorized transactions” took place. However, they have not provided information on the amount of money stolen.
The full story and statistics can be found here: Crypto Stocks Short Sellers Are up 89.58% YTD Following the FTX Collapse
Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.
Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.
Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.