Why this report matters Shares of stablecoin issuer Circle have rallied more than 80% in less than three weeks since we highlighted the potential for a short-covering squeeze around the earnings release in our February 20 report. Updated short-interest data, typically published 7–10 days after the settlement date, shows that hedge funds had already begun reducing some of their positions ahead of the catalyst, after short exposure reached 17.8% of the public float. Even so, short interest remained substantial at the time of the earnings release, totaling roughly $1.3 billion, implying that hedge funds likely incurred close to $1 billion in mark-to-market losses as the stock rallied. As we outlined in our earlier analysis, we expected short covering to provide a powerful tailwind for shares of crypto equities, with these equities outperforming Bitcoin. This makes it worthwhile to take a closer look at the scale of hedge-fund short positioning across the broader crypto-equity universe. It may come as a surprise that another crypto/Bitcoin proxy trade structure currently looks highly compelling. While it may not offer the same explosive upside as the recent Circle trade, the risk-reward profile remains attractive. Importantly, the structure provides a built-in buffer against downside risk, making it particularly well-suited for the current market environment. Bitcoin (LHS) vs. value of short positions against crypto equities (RHS, $bn)
Subscribe to 10x Research Market Updates to unlock the rest.Become a paying subscriber of 10x Research Market Updates to get access to this post and other subscriber-only content. A subscription gets you:
|
0 💬:
Post a Comment