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Bitcoin surged this week, climbing after Tesla
TSLA
Musk sent the price of bitcoin sharply higher as a long-standing battle between bullish retail traders staged through Reddit’s WallStreetBets forum and Wall Street hedge funds that have long been selling GameStop stocks came to a head – with regulators and brokers trying to calm the frantic markets with handed restrictions.
Now, the data revealed Hedge funds are running out of bitcoin to the tune of more than $ 1 billion, even as retail traders cram into bitcoin and other cryptocurrencies.
Traders on Reddit’s WallStreetBets forum have raised the price of GameStop shares in recent weeks. … [+]
STRF / STAR MAX / IPx
Hedge funds have increased their bitcoin short positions – in fact betting that the price of an asset will go down – since the price of bitcoin began to climb in October, the company’s news and data showed. The Block cryptographic analyzes.
According to the CFTC’s latest Traders in Financial Futures report, the net short position in bitcoin futures is now the largest it has ever been.
The price of bitcoin has climbed about 200% since October, rising to over $ 40,000 per bitcoin before declining slightly. The meteoric bitcoin rally has been largely blamed on the warming of institutional investors by cryptocurrency and payments giants such as PayPal
PYPL
PYPL
adding their support – although fears of bubbles have emerged.
As hedge funds increasingly bet against the price of bitcoin, covering their long positions to some extent, retail traders empowered by apps and annoyed by lockdowns are speculating on bitcoin and everything in between.
“Being stuck at home due to lockdowns and pandemic restrictions appears to have caused an influx of day traders,” Frederique Carrier, chief investment officer at RBC Wealth Management, wrote in a note.
“The attitude of investors is shaped by the gains that make the headlines of some high-profile issues. For example, bitcoin’s 35% gain in the first nine days of 2021, following a five-fold price spike from March through December. 2020; or the more than six-fold increase in GameStop actions in less than two weeks until January 26; or even Tesla, now the fifth largest stock in the S&P 500 by market cap, with a market capitalization larger than that of the main US, European and Japanese automakers combined. “
Hedge funds have been selling bitcoin more and more since the price of bitcoin started to climb … [+]
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Brokerage eToro, after adding 5 million users throughout 2020, recorded 1 million more in the first month of 2021 – suggesting that demand for stocks and cryptocurrency trading continues to grow. grow among causal investors.
Meanwhile, many in the bitcoin and cryptocurrency community were quick to encourage the idea that retail traders frustrated with the restrictions should turn to crypto.
“With Robinhood halting trading in some assets like GameStop and Nokia and Adena Friedman, CEO of Nasdaq, calling for regulations to prevent retail investors from coordinating on social media, the case for cryptocurrencies are only getting stronger, “Nicholas Pelecanos, head of trading at blockchain platform NEM, said in comments via email. “I believe we will see a new wave of investors coming into Bitcoin and other major crypto assets as a result of this debacle.”
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