Summary
- Strategy (MSTR) led the crypto-related stocks, increasing by 11.95% to $103.58, while Coinbase (COIN) rose 9.05% to $159.47.
- Circle (CRCL) saw a 9.44% gain to $78.50, and BitMine (BMNR) rose 9.68% to $20.05, following Bitcoin's ascent towards $70,000 amid a market-wide short squeeze.
- Both Strategy and Coinbase are among the most shorted large-cap stocks on Wall Street, indicating that today's rally may also be forcing equity bears to cover their positions.
Crypto stocks experienced their most significant one-day increase of the summer.
Leading the charge was Strategy, trading under MSTR, with a surge of 11.95% to $103.58. Coinbase (COIN) followed, climbing 9.05% to $159.47. Circle (CRCL), a stablecoin issuer, increased by 9.44% to $78.50, while BitMine (BMNR), which holds Ethereum, gained 9.68% to $20.05, reflecting the movement across this select group of crypto-related stocks on Wall Street.
All four stocks reached new intraday highs during the session, with MSTR hitting $106.90 (+13.07% from its opening), COIN at $165.74 (+12.37%), CRCL at $81.22 (+10.10%), and BMNR at $20.90 (+12.79%), before some of those gains were trimmed as the session progressed.
These stocks are connected to the cryptocurrency market in various ways, but they all respond to the same driving force: Bitcoin's price. Strategy holds Bitcoin directly in its corporate treasury, Coinbase generates revenue from crypto trading fees, Circle issues the USDC stablecoin and earns yield on its reserves, while BitMine accumulates and stakes Ethereum, which is closely linked to Bitcoin's price as the leading altcoin.
The rally on Wednesday coincided with Bitcoin's own short squeeze as it approached $70,000, resulting in over a billion dollars in liquidated bearish positions within just one hour. Additionally, the U.S. Treasury announced plans to double the size of its long-bond buyback program starting in September, a liquidity-boosting measure that lifted risk assets broadly, contributing to a more than 5% increase in the total crypto market during the trading session.
This surge also followed a White House meeting where President Trump was expected to engage with SEC and CFTC leaders along with crypto executives to discuss market structure regulations, alongside the release of the Federal Reserve's July meeting minutes, both of which could introduce further volatility before the market closes.
Strategy and Coinbase hold particular importance as they rank among the most shorted large-cap stocks on Wall Street, with Coinbase currently being the fifth most shorted stock in the financial sector. Thus, today's surge isn't solely about crypto derivatives traders being squeezed; it also involves equity short sellers who have been betting against these two companies being forced to cover their positions in a rising market.
Strategy's data illustrates why its stock is so closely tied to Bitcoin's movements. The firm reported holding 840,447 BTC and $4.8 billion in cash as of its latest weekly filing, making its stock price function similarly to a leveraged investment in Bitcoin. Given Bitcoin's bearish trend this year, short positions have appeared to be a "safe" bet.
BitMine presents a similar scenario concerning Ethereum. The company holds 5.82 million ETH, valued at approximately $11.4 billion, which is about 4.8% of Ethereum's circulating supply, as stated by chairman Tom Lee this week, positioning BMNR as closely aligned with Ethereum as a Nasdaq-listed company can be.
Despite Wednesday's increase, Strategy, Coinbase, and BitMine remain significantly down for the year, with analysts divided over whether this movement signifies a genuine turnaround or merely a short-covering spike within a prolonged downtrend. Observing the follow-through volume on these assets in the coming sessions, along with Bitcoin's ability to maintain the $70,284 resistance level noted in Wednesday's chart, will likely determine the prevailing sentiment.