Hedge Funds to Leave Bitcoin Behind and Start Shorting MicroStrategy – Peter Schiff

Hedge funds are changing their strategy by withdrawing from Bitcoin and targeting MicroStrategy for short positions, according to gold investor Peter Schiff.

This move reflects a significant shift in sentiment towards both the leading cryptocurrency and MicroStrategy, a company known for its substantial Bitcoin holdings. Schiff warns that hedge funds, which previously hedged Bitcoin’s volatility by shorting MicroStrategy stock, are now expected to unwind their Bitcoin positions and focus solely on shorting MSTR. This shift could lead to additional selling pressure on Bitcoin and further declines in MicroStrategy’s stock.

Shares of MicroStrategy have declined 30% from the March high. Hedge funds that shorted $MSTR and bought #Bitcoin as a hedge may soon lift the long Bitcoin leg and just stay short MSTR. Their own Bitcoin selling will add to the downward pressure on MSTR, enhancing their gains.

— Peter Schiff (@PeterSchiff) June 24, 2024

Bitcoin recently dropped below $61,000, causing concern in the crypto market. Analysts are looking into factors like technical resistance and uncertainties over Federal Reserve policies as reasons for this decline. Concerns about inflation and significant outflows from U.S. spot Bitcoin ETFs are also contributing to market volatility.

MicroStrategy’s stock has also seen significant declines, with a recent drop of over 5%, now trading around $1,401. Despite these setbacks, MicroStrategy continues to invest in Bitcoin, recently reaching a profit milestone of $6.33 billion from its purchases. This ongoing investment underscores the company’s commitment to digital assets, even amid market turbulence and skepticism from prominent investors like Schiff.

The overall economic environment remains uncertain, with hedge funds adjusting their strategies and the crypto market facing multiple pressures. MicroStrategy’s continued investment in Bitcoin highlights its belief in the long-term value of digital assets, despite the current challenges and shifting market dynamics.

Kosta Gushterov