Time for a Wallstreetbets short squeeze on bitcoin miners?

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Last Updated on 6 November 2023 by CryptoTips.eu

As the financial times reported yesterday, Wall Street hedge funds are hoping to make a quick buck and have therefore taken up a massive short position against bitcoin mining company Marathon Digital. Although banks believe that 2023 will signal the end of crypto winter, as we told you earlier this week, hedge fund managers are hoping to ride one last wave of profit.

However they seem to forget that Marathon Digital is one of the favorite stocks of the famous Wallstreetbets group on Reddit (who earlier this year took on Jim Cramer). Furthermore, signaling this group that you have positioned yourself short in one of their favorite stocks could backfire.

It is true though, short interest in US group Bitcoin mining company Marathon Digital, has grown to about 36 per cent of the outstanding shares in the weeks after FTX collapsed.

Because crypto is trading vastly below where it was before, and they [miners] have a lot of expenses, it’s not clear they will ever be able to turn a consistent margin.

Explained Chris Crawford, chief investment officer at Crawford Fund Management in Boston

Advertentie.

Short squeeze

Problem is that back in 2021, hedge funds also made a similar short bet against another favorite stock of the Wallstreetbets crowd, namely Gamestop. In return the Wallstreetbets group ganged up on them and did a short squeeze, where the Melvin Capital hedge fund was forced to cover its short position against Gamestop and loan a few billion dollars from other hedge funds to do so. Meanwhile, against all known logic, the price of Gamestop shot up.

Marathon’s shares are down 86% for the year. In Wallstreetbets speak that would then become: so you are saying a short squeeze is possible?

rafapress / Depositphotos.com

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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