Short Sellers Have Big Stakes for 2018 in Stocks Tracking Bitcoin, Cryptocurrency and Blockchain

January 11, 2018 by Jon C. Ogg

Source: Thinkstock
24/7 Wall St. tracks many key changes in the short interest of major sectors, but the fascination and outright tug-of-war taking place in the world of bitcoin, cryptocurrency and blockchain has taken over the financial media as the latest craze (or bubble). Due to the surge in many of the companies launching crypto-this and crypto-that, it also should be no surprise that short sellers have become rather active in many of these companies.

These are far from all the companies making “crypto” announcements, and many of the companies have only made announcements after the December 29 and December 15 settlement dates tracked by Nasdaq and the New York Stock Exchange.

Here are the major short interest changes as of December 29, 2017, around some of the more well-known and speculative crypto stocks. As a reminder, the short interest at the end of a year might even imply that short sellers are making their bets stronger or weaker against the crypto stocks for the whole year.

Digital Power Corp. (NYSEAMERICAN: DPW) has crypto-news almost daily at this point. Apparently this gain burned enough short sellers, if you see the trend here. Its short interest was 1,993,418 shares at the end of December, down over 44% from the 3,569,674 shares short in mid-December. The stock was last seen trading at $2.86, but its shares were under $1 for months until its crypto efforts took shares from about 60 cents in November up to the high of $5.95 in mid-December. A move of that size will sure kill a few short sellers real quick.

Long Blockchain Corp. (NASDAQ: LBCC) was formerly Long Island Iced Tea, but that was then and now it is a crypto stock. The short interest has risen handily here from what used to be almost nothing from a company that was not even known by 99.9% of investors. The December 29 short interest rose to 575,350 shares. The average daily volume is now 2 million shares, but it used to be well under 100,00 shares. The short interest was 465,851 in mid-December, 223,660 at the end of November, 177,557 mid-November and 139,424 at the end of October. Prior to October we had not seen any month in which the short interest was 100,000 shares.

Longfin Corp. (NASDAQ: LFIN) is still a rather newly traded company, going from fintech and then seeing an exponential surge from about $5 to $125 after announcing the acquisition of a blockchain company. Due to a low float, it is probably an extremely difficult stock to even find to borrow for a short sale. Its short interest was 196,365 shares at the end of December.

Marathon Patent Group Inc. (NASDAQ: MARA) is what some investors call a patent troll, but buying crypto-mining Global Bit Ventures tripled its market value. This was a $4.55 stock when we looked at it back in December, and it was last seen at $3.90, in a 52-week range of $0.52 to $10.03. More short sellers may have been crushed here during the run higher. Its short interest of 1,807,685 shares on December 29 was down from the 2,685,990 on December 15. That being said, the short interest was 1,864,088 shares at the end of November and just 572,626 shares short on November 15.

Overstock.com Inc. (NASDAQ: OSTK) has frequently been an on-and-off target of short sellers. The company may be moving away from being a merchant entirely and is now a bitcoin and cryptocurrency pioneer. Its stock went from under $15 in 2017 to a high of almost $90 recently, and it was last seen at $82.35 a share. CEO Patrick Byrne must be celebrating that he destroyed so many short sellers after having had such a controversial and vocal call against them years ago. Overstock.com had a short interest of 7.63 million shares at the end of December, and while that is down from the peak of 8.25 million in mid-December, just 2.2 million shares were short in September.

Riot Blockchain Inc. (NASDAQ: RIOT) used to be known as Bioptix and used to be in the world of biotech and biohealth before changing to investing in the blockchain ecosystem. It was just a $7 stock a few months ago, but its shares peaked at $46 or so in mid-December, versus about $22.00 on last look. This short interest tally tab below should tell the story well enough:

  • DEC29  2,557,335
  • DEC15  1,701,501
  • NOV30  880,370
  • NOV15  601,553
  • OCT31  417,613
  • OCT13  128,234
  • SEP29  11,447

Social Reality Inc. (NASDAQ: SRAX) went from an internet advertising and platform technology company to surging on news of an initial coin offering (ICO) and on news that it is developing a blockchain identification graph technology named BIG Platform. Shares were at $5.88 on last look, and its 52-week range is $1.11 to $7.95. The short interest was literally 10,000 to 20,000 shares for much of 2017, but here is how that has risen since October:

  • DEC29  1,487,975
  • DEC15  1,268,773
  • NOV30  1,002,118
  • NOV15  254,206
  • OCT31  18,041

Square Inc. (NYSE: SQ) was a huge a beneficiary of the bitcoin craze for a while, seeing shares surge after its soft bitcoin launch. Back on November 15, Square started allowing a small number of users of Square Cash to buy bitcoin directly from its smartphone app. Square shares rose from under $30 in early October and peaked at almost $50 around Thanksgiving. Square was last seen at $42.50. The short interest was 32,520,214 shares at the end of December, down over 4.3 million from the 36,825,598 in mid-December.

U.S. Global Investors Inc. (NASDAQ: GROW) saw its shares surge late in 2017 after the boutique registered investment advisory firm started mining bitcoin in Iceland, where electricity is cheap. Its shares went from less than $1.50 in September to a high of $7.49, before settling back down around $4.65 recently. Here is how the short interest has gone according to U.S. Global Investors:

  • DEC29  1,487,975
  • DEC15  1,268,773
  • NOV30  1,002,118
  • NOV15  254,206
  • OCT31  40,331