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6th June 2024 > > Short-sellers beware.


Cryptos have the habit of hurting short-sellers, be they of cryptos or crypto-related stocks.

Market Snap

Market Wrap

Another half a billion dollars of investment capital flowed into spot BTC ETFs yesterday suggesting that this latest breach of $70k to the upside might have some legs. And even if they are just little ones, there is $1.5bn of leveraged shorts at $72k raising the delightful prospect of cascading short liquidations taking us into brand new price territory.

Curious Cryptos’ Commentary – Kerrisdale Capital

Some people haven’t got the memo that Operation Choke Point 3.0 is being wound down, and wound down fast.

You will recall that Kerrisdale Capital recently took a potshot at one of my favourite leveraged-without-risk-of-liquidation-plays on the price of BTC, namely MSTR. As a short-seller, Kerrisdale looks for companies that are mispriced relative to some other asset. In the case of MSTR, the other asset is BTC. Its rationale makes some sense, but does not take into account that nearly a quarter of the free-float of MSTR shares have been lent to short-sellers, potentially setting up the mother of all squeezes. This is one overwhelming reason why the CC Treasury maintains an overweight position in MSTR:

As for Operation Choke Point 3.0, Kerrisdale is part of Warren’s anti-crypto army:

That old environmental trope gets disinterred once more.

Now Kerrisdale is targeting Riot specifically:

Its anti-crypto bias pours out of every page of this report. A quick analysis of a small section on Page 5 will suffice as an example.

Kerrisdale criticises executive at Marathon Digital for comparing BTC miners to gold miners for two key reasons:

“1) oil and gold producers do not have their unit economics literally halved every four years, which requires spending furiously in advance of those dates, and

2) a gold miner’s unit costs to physically extract gold from its particular mine is not made dynamically more difficult by competitors across the globe buying the same mining equipment from the same two suppliers (China-based Bitmain and MicroBT control north of 90% of the ASICs used to mine bitcoin).”

These are fair comments but somehow Kerrisdale directly draws from them the following conclusion:

“We’ve never come across an industry with as few barriers to entry as bitcoin mining.”

This is nonsensical. Kerrisdale is being blinded by its bias.

But if you are an investor in Riot, it is well worth a read for an alternative point of view, however mistaken it is in places.

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