Zimpapers Logo

The fallout for publicly-traded companies exposed to cryptocurrencies has been a boon for investors betting against them, delivering roughly US$469 million in paper profits for November alone.

MicroStrategy is down 37 percent this month through Wednesday’s close, handing shorts US$286 million in mark-to-market profits, while Coinbase Global Inc.’s 26 percent decline delivered another US$229 million in gains, according to financial analytics firm S3 Partners. Huge losses for other peers, including Marathon Digital Holdings and Silvergate Capital, have helped drive profits in November for investors betting against the industry through short sales, Ihor Dusaniwsky, S3’s managing director of predictive analytics, wrote in a note.

The group of stocks has tumbled as investors weigh how far reaching the fallout from the collapse of Sam Bankman-Fried’s FTX Group will be across the cryptocurrency ecosystem.

Contagion from FTX’s bankruptcy has forced management teams to attempt to distance themselves from the company, with exposed stocks following tokens, including Bitcoin, lower.

The largest cryptocurrency by market value has fallen nearly 20 percent so far this month, compared with a 1,1 percent gain for the S&P 500 Index.

“We expect increased short selling in these stocks as the possibility for broader sector wide price weakness increases,” Dusaniwsky wrote. – Bloomberg