Short Sellers in Crypto Stocks Get Pinched by Rising Bitcoin

A surge in Bitcoin's price to above $80,000 has left some investors nervous about their short positions. According to S3 Partners, shares of Strategy Inc (NASDAQ:MSTR), Strive Inc (NASDAQ:ASST) and Coinbase Global (NASDAQ:COIN) are heavily shorted and could be candidates for a short squeeze.

The increased short interest in these stocks may indicate that investors are hedging their bets against Bitcoin's rising price. Unlike the iShares Bitcoin Trust (NASDAQ:IBIT), which has low short interest, Strategy and Strive have high correlations with Bitcoin's price, suggesting that investors may be shorting these stocks as a way to hedge their exposure.

Strive Inc appears to be particularly vulnerable to a short squeeze, with around 26% of its shares shorted and a correlation coefficient of 0.7 or higher with the price of Bitcoin. The company's stock has already surged in recent months, increasing by 33.9% over the last month and 210% over the last six months.