Data reveal that bitcoin may be on the verge of becoming the new gameStop after a huge price increase

Bitcoin rose this week, rising after Tesla

TSLA
Chief Executive Elon Musk gave the cryptocurrency an unspoken endorsement.

Musk sent the bitcoin price sharply upward as a long battle between bullish retail traders organized through Reddit’s WallStreetBets forum and Wall Street hedge funds that have long been selling GameStop stock has reached its climax – with regulators and brokers trying to calm it down frantic markets with handed restrictions.

Now, data revealed hedge funds have little bitcoin at more than $ 1 billion, even as retail traders accumulate bitcoin and other cryptocurrencies.

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Hedge funds have been increasing their short bitcoin positions – effectively betting that the price of an asset will fall – since the price of bitcoin started to rise in October, data from analytics and crypto firm The Block showed.

The net short position in bitcoin futures is now the highest ever, according to the latest report from CFTC Traders in Financial Futures.

The price of bitcoin has skyrocketed around 200% since October, rising to over $ 40,000 per bitcoin before dropping slightly. The explosion of bitcoin was largely attributed to institutional investors who are enthusiastic about cryptocurrency and payment giants like PayPal

PYPL

PYPL
adding their support – although the fear of the bubble has arisen.

As hedge funds increasingly bet against the price of bitcoin, to some extent covering their long positions, app-enabled retailers and bored by lockdowns are speculating about bitcoin and everything.

“Being stuck at home due to pandemic restrictions and blockages seems to have stimulated an influx of day traders,” wrote Frédérique Carrier, head of investment strategy at RBC Wealth Management, in a note.

“Investor attitudes are being shaped by the headline gains from some high profile issues. For example, the 35% gain made by bitcoin in the first nine days of 2021, following a fivefold increase in the price from March to December 2020; or the more than six-fold increase in GameStop shares in less than two weeks by January 26; or even Tesla, now the S&P 500’s fifth largest share by market capitalization, with a market capitalization greater than than that of the main American, European and Japanese automakers. “

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The eToro broker, after adding 5 million users in the entire year 2020, registered 1 million more in the first month of 2021 – suggesting that the demand for stocks and cryptocurrencies is still growing among causal investors.

Meanwhile, many in the bitcoin and cryptocurrency community were quick to encourage the idea that retailers frustrated by restrictions should turn to cryptography.

“With Robinhood interrupting the trading of certain assets like GameStop and Nokia and Nasdaq President and CEO Adena Friedman, calling for regulations to prevent retail investors from coordinating on social media, the cryptocurrency issue only gets stronger,” said Nicholas Pelecanos, director of trading for the blockchain platform NEM, said in comments by email. “I believe that we will witness a new wave of investors arriving at bitcoin and other important crypto assets as a result of this disaster.”