By Sam Boughedda
With cryptocurrencies plunging, S3 Partners analyst Ihor Dusaniwsky released a note to investors focusing on the crypto-related companies in its coverage list and the gains made by shorting them.
"Short selling has been a profitable trade in 2022, with U.S. equity short sellers up over 30% for the year," said Dusaniwsky, going on to list the most profitable industries to be short.
"But none of these industries can hold a candle to short sellers in the Crypto sector who are up +126% on an average short interest of $3.0 billion in 2022," he wrote.
The analyst added that short sellers in the fifteen crypto stocks they cover, including Coinbase (NASDAQ:COIN), Microstrategy (NASDAQ:MSTR), Marathon Digital (NASDAQ:MARA), and Riot Blockchain (NASDAQ:RIOT), are up +126% in mark-to-market profits for the year, up +42% in June, and were up +16% on yesterday’s crypto meltdown.
"Shorting Cryptos - Winner, Winner Chicken Dinner," he stated.
"We continue to see short selling in these stocks, with $71 million of new short selling in less than two weeks of June. But with the pool of stock borrows in these names limited, due to lack of sizable ownership in the funds of the largest and most active stock lenders on the street, prospective short sellers may be late to the party. While the crypto stocks negative price momentum may not be over, the ability to short stock in size may be over," warned Dusaniwsky.