Hedge Funds Short Bitcoin For $1 Billion - Does WallStreetBets Know?

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WallStreetBets, the mass social media group on Reddit that made hedge funds lose as astonishing $90 billion dollars in the month of January alone, might be looking for new targets now that February is upon is, typically a bad month for stocks.

They could be interested to know that hedge funds have taken short positions against Bitcoin as well. Currently they are shorting over 39,000 BTC worth around 1,32 billion dollars. A short squeeze against those would mean the price of Bitcoin goes up as the hedge funds would have to cover their positions, just saying you know.

Looks like some hedge funds are twice more short than long on #Bitcoin futures, shorting 39,000 BTC worth $1.37 billion.

Would be a shame if someone passed on this information to WSB. pic.twitter.com/FHt13LI0Fj

— Bloqport (@Bloqport) January 31, 2021

WallStreetBets just as historic as March 2020

In crypto terms, no one wants to be reminded of March 2020 in fact. Although by now the coin invented by Satoshi Nakamoto is trading near all-time-highs, it dropped an astonishing 50% on 12 and 13 March last year, in a dizzying trading session. Some contrarian investors are convinced that this could happen again.

Serious tremors in global markets.

Liquidity behind decentralized mkt players overwhelming “risk averse” centralized legacy gang.

Fragile risk “models” like VAR not relevant with M2 at 25% y/y and global liquidity +$30 tril in 1yr.

Awesome power of networks to make history now pic.twitter.com/9qS3hTNKA1

— Dan Tapiero (@DTAPCAP) January 31, 2021

Even though any new pandemic is not just around the corner (the Italian lockdowns were the reason for a historic first two week March drop on Wall Street last year) as we’re still in the middle of this one, the hedge funds believe that February 2021 could be the same for Bitcoin as February 2018 was.

Back then, after Bitcoin had rallied massively in December and January, Bitcoin started a drastic descent as from February which made the best known crypto lose 80% of it’s value.

Stuck at home

Although things look different know, with institutional money invested in Bitcoin, it is of course a possibility we cannot discount, and it looks like certain hedge funds are also not doing that. At the moment, their short positions on Bitcoin are the highest they have ever been. But hey, this is not a normal stock market or even crypto market year so far.

Being stuck at home due to pandemic lockdowns and restrictions seems to have spurred an influx of day traders.

Frédérique Carrier, head of investment strategy at RBC Wealth Management, declared in a Forbes interview.

It is certainly a fact that this seems like a changed market and that there is no coming back to normal after what happened with WallStreetBets, Gamestop and even Dogecoin this week.

Investor attitudes are being shaped by the headline-making gains of some high-profile issues. For example, the 35% gain made by bitcoin in the first nine days of 2021, on the heels of a fivefold surge 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 capitalisation, with a market cap larger than that of the major U.S., European, and Japanese automakers combined

Mr Carrier continued.

It will be interesting to see how February unfolds for the hedge funds going short on Bitcoin, and whether WallStreetBets moves on to a new target.

Hedge Funds are short #Bitcoin from Bitcoin

The discussion forum on Reddit which talks about the issue has the following as it’s first answer:

So you’re saying, there’s a chance (for a short squeeze)?

denisismagilov / Depositphotos.com