Short sellers have amassed a staggering $3 billion in bets against Bitcoin mining stocks like Marathon Digital and Riot Platforms, anticipating a potential short squeeze.[1] Despite the surge in Bitcoin transaction fees boosting miners' revenue, these stocks have underperformed, attracting significant short interest.

The data reveals that Marathon Digital has 25.68% of its float shorted, while Riot Platforms has 13.48% shorted.[2] This crowded short positioning, coupled with the stocks' recent rallies, has set the stage for a potential short squeeze scenario. A short squeeze occurs when an unexpected price surge forces short sellers to cover their positions, further driving up prices.

Technical analysis suggests that the selling pressure from short sellers might be overdone, and a short squeeze could be imminent for these Bitcoin mining stocks.[2] Analysts warn against doubling down on such crowded trades, as short squeezes can lead to massive losses for short sellers, as witnessed in the cases of GameStop and Tesla.[5]

While some traders may be shorting mining stocks to hedge their long Bitcoin positions, the significant short interest and potential for a short squeeze have made Marathon Digital, Riot Platforms, and other mining stocks prime candidates for a short squeeze event.[2][5]

Sources [1] https://www.dlnews.com/articles/markets/short-sellers-pile-3bn-into-squeezable-bitcoin-miner-bets/ [2] Ripe for the squeeze? Bitcoin mining stocks remain under attack ... https://cointelegraph.com/news/ripe-for-the-squeeze-bitcoin-mining-stocks-remain-under-attack-from-short-sellers [3] Be careful! Short sellers are flocking into cryptocurrency stocks, and ... https://longportapp.com/en/news/200831619 [4] Short Sellers Double Down on $11 Billion Bet Against Crypto Stocks https://www.cryptoglobe.com/latest/2024/03/short-sellers-double-down-on-11-billion-bet-against-crypto-stocks/ [5] Crypto Stocks Like MicroStrategy, Coinbase Could Shoot Up if Short ... https://www.coindesk.com/business/2024/03/27/crypto-stocks-like-microstrategy-coinbase-could-shoot-up-if-short-sellers-exit/ [6] Short Sellers Bet $11 Billion That Crypto Stock Rally Won't Last https://www.bloomberg.com/news/articles/2024-03-26/short-sellers-bet-11-billion-that-crypto-stock-rally-won-t-last