Short sellers targeting MicroStrategy (NASDAQ:MSTR) have faced significant losses, totaling $1.92 billion since March, as per data from S3 Partners. This underscores the impact of a rally that has propelled the stock’s performance beyond that of bitcoin.

The approval of several spot bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC) in January has brought the once-nascent asset class closer to mainstream adoption.

Traders betting against crypto exchange Coinbase (NASDAQ:COIN) and bitcoin miner CleanSpark (NASDAQ:CLSK) have also suffered losses, with figures amounting to $593.50 million and $106.40 million, respectively, according to the data.

MicroStrategy held nearly 190,000 bitcoins on its balance sheet as of the end of 2023 and has expressed intentions to further increase its exposure to the cryptocurrency. The company recently sold convertible debt twice within a week to raise funds for purchasing more Bitcoin.

Analysts at BTIG noted in an April report that the premium for MicroStrategy is driven by investors seeking exposure to bitcoin who may not have direct access to the cryptocurrency or ETFs. The company’s ability to raise capital for expanding its bitcoin holdings is viewed positively by shareholders, the brokerage added.

Despite the recent optimism surrounding certain crypto-related stocks, short interest in nine of the most closely monitored companies in the crypto space remains high, standing at 16.73% of the total outstanding shares, which is more than three times the average in the United States.

The SEC’s discomfort with crypto persists, and its approval of spot bitcoin ETFs may not necessarily indicate a willingness to embrace similar products, such as spot ethereum ETFs, Reuters has reported.

Alan Konevsky, chief legal and corporate affairs officer at online investment platform tZERO, remarked that the decision on spot bitcoin ETFs does not signal a change in philosophy at the Commission and may not lead to further favorable decisions.

Short sellers engage in selling borrowed shares with the expectation of buying them back at a lower price later, thereby profiting from the price difference.

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Amid the crypto frenzy, a tokenized hedge fund named Ethena has captured attention by offering a 37% yield through its USDe token, attracting billions of dollars in tokens and generating widespread market buzz. However, alongside the excitement, skepticism looms regarding the sustainability of such high yields.

Ethena’s USDe token, labeled as a synthetic dollar, achieves its impressive yield through a crypto version of the basis trade, exploiting price differences between spot and futures markets. This strategy, known as a cash-and-carry trade in crypto, has proven highly profitable recently amid surging token prices and soaring funding rates, which are the interest paid by bullish traders to maintain futures positions.

While high yields are enticing, they often come with elevated risks, as seen in the crypto-market turmoil of 2022 when inflated rates on the TerraUSD token proved unsustainable. Although Ethena’s design differs from Terra’s, investors remain cautious about potential risks in an asset class notorious for unexpected downturns.

Ethena operates as a tokenized hedge fund, managing a complex trading strategy across multiple crypto exchanges. The worst-case scenario, according to Robert Leshner, a partner at fintech venture fund Robot Ventures, is underperformance relative to implied funding rates across exchanges.

Here’s how Ethena works: Traders generate USDe tokens by depositing stETH and other accepted tokens into an automated system. Ethena Labs, the entity behind USDe, then opens short positions via Ether futures and perpetual swaps across various exchanges, including Binance. These short positions allow holders of sUSDe, a derivative of USDe, to benefit from high funding rates, which have exceeded 100% annualized in the current bull market.

Ethena’s rapid growth since its inception last year has been remarkable, with over $2 billion worth of cryptocurrencies deposited into the project, according to DefiLlama. This surge is fueled by the demand for high yields following the fallout of lenders like Genesis and BlockFi in 2022.

Despite its success, Ethena faces inherent risks, including funding risk if rates turn negative, exchange risk in the post-FTX crypto market, custodial risk relying on third-party partners, and collateral risk due to its reliance on stETH. However, the team behind Ethena remains optimistic, emphasizing that most risks are either unlikely or manageable.

While some experts remain cautious about potential downsides, Ethena’s team asserts its commitment to transparency and risk mitigation. As the crypto market continues to evolve, Ethena’s performance will be closely monitored to assess its resilience amidst changing market conditions.

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Gunzilla Games has revealed a groundbreaking integration with OpenSea, enabling players to trade in-game assets on the NFT marketplace. This integration will debut with Gunzilla’s upcoming video game, “Off the Grid.”

In a statement, Gunzilla Games announced that OpenSea will incorporate the gaming developer’s GUNZ blockchain, which operates on a custom Avalanche subnet. This integration aims to establish a compliant and transparent NFT marketplace for trading in-game items. Players and OpenSea users will have the opportunity to trade in-game NFT items for any game built on the GUNZ blockchain, utilizing the GUN token as the exclusive method of payment.

OpenSea CEO Devin Finzer expressed enthusiasm for partnering with Gunzilla Games, praising their commitment to exceptional gameplay and advanced in-game economies that prioritize player experience.

“Off the Grid,” Gunzilla Games’ battle royale title, will be the first game to leverage this integration. Set for release on PC, PlayStation, and Xbox consoles later this year, “Off the Grid” could become the first video game on both Sony’s PlayStation and Microsoft’s Xbox to enable players to own and trade digital assets as NFTs.

This announcement aligns with recent patent filings by Sony Interactive Entertainment, indicating interest in NFTs for transferring assets across games and console generations.

Gunzilla Games co-founder and CEO Vlad Korolov emphasized the significance of this partnership, stating that the launch of “Off the Grid” will offer a preview of the future of gaming economies.

In response to inquiries regarding regional restrictions on trading “Off the Grid” NFTs, Gunzilla Games stated that in-game assets held by players in regions where the game debuts will be tradable on OpenSea. The company plans to issue separate announcements about the specific rollout of GUNZ across different regions.

Last month, Gunzilla Games announced a $30 million funding round co-led by CoinFund and Avalanche’s Blizzard Fund, with ambitions to develop the first blockchain-based AAA video game targeted at mainstream gamers.

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Zeta Markets, a decentralized derivatives protocol operating on Solana, has introduced its native governance token, Z, as part of a broader strategic initiative. The token launch coincides with plans to roll out Solana’s inaugural layer 2 scaling solution, according to a press release from Zeta Markets.

The Z token, with a total supply of 1 billion, aims to foster community engagement and participation within the Zeta ecosystem. As an integral part of the protocol, the token will enable users and community members to influence important decisions and receive additional rewards through staking.

Initially, 10% of the Z token supply will be distributed via an airdrop to active Zeta traders, stakers, and strategic Solana community participants. Active traders will receive 50% of the initial distribution based on their Z-score, while stakers will receive 40%. The remaining portion will be allocated to selected Solana community members.

Moreover, Zeta Markets plans to allocate 30% of the token supply to incentivize market makers, who play a crucial role in maintaining liquidity and optimal trading conditions on the platform.

Tristan Frizza, the Founder of Zeta Markets, expressed enthusiasm for the token launch, emphasizing the protocol’s commitment to democratizing decentralized finance (DeFi). Frizza highlighted Zeta’s track record of facilitating billions in trading volume and its aim to offer a transparent and user-centric DEX experience.

With over $21 million worth of cryptocurrencies locked in Zeta Markets, the platform ranks as the fifth-largest derivatives platform on Solana, according to DeFiLlama data.

The introduction of the Z token marks a significant step towards empowering the Zeta community and shaping the future trajectory of decentralized finance on Solana.

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