Short sellers target bitcoin ETFs and tech amid market turbulence
25 November 2025
Matt Chessum, executive director, equity and analytic products at S&P Global Market Intelligence, reviews the multi-month highs of the bitcoin ETFs and tech stocks and what this means for future investment
Image: Shutterstock
In a shift in market sentiment, short interest in bitcoin exchange traded funds (ETFs) and technology stocks has increased to multi-month highs, indicating scepticism about the sustainability of valuations in these sectors. This trend represents a departure from the bullish stance that dominated much of the year.
Bitcoin ETFs face short pressure
The iShares Bitcoin Trust (IBIT), one of the largest bitcoin ETFs, has seen an increase in short interest from 0.02 per cent at the beginning of the year, to approximately 0.6 per cent currently. This increase indicates concerns among institutional investors about bitcoin's near-term prospects.
The increase in IBIT short interest reflects a reassessment of risk in the cryptocurrency space. Investors who previously viewed bitcoin as a potential inflation hedge are now seen to be treating it as a high-beta tech stock, a leveraged bet on risk appetite in financial markets. Bitcoin has declined approximately 27 per cent from its October all-time high of US$126,000 over the last few weeks.
Tech sector under pressure
The technology sector, which has been correlated with bitcoin performance, is experiencing similar short selling pressure. North America software and services companies have short interest of 0.826 per cent, while semiconductor and semiconductor equipment firms show short interest reaching 0.285 per cent, some of the highest levels seen this year.
This parallel development is not coincidental. Bitcoin's correlation with the Nasdaq 100 currently stands at approximately 0.80 — near decade highs — indicating that digital assets and technology stocks are increasingly moving in tandem.
Catalysts behind the short interest increase
Several factors have contributed to the rising short interest:
Valuation concerns. The tech sector's forward P/E ratio has reached approximately 32x compared to its 10-year average of 22x, creating what is viewed as a premium.
Liquidity conditions. Rising bond yields and tighter financial conditions have reduced appetite for risk assets.
Institutional outflows. Bitcoin ETFs saw over US$1.1 billion in outflows in one week, similar to withdrawals from equity funds.
Macroeconomic uncertainty. Weak consumer sentiment data and concerns about sustainable growth have prompted investors to reduce exposure to speculative assets.
AI stocks affected
Companies associated with artificial intelligence have experienced selling pressure. Super Micro Computer declined 23 per cent last week as short interest increased to 13 per cent of its outstanding shares, while Nvidia fell seven per cent while also displaying growth in short interest.
The sell off reduced market value of AI-linked stocks by approximately US$820 billion in one week, with the Nasdaq Composite falling about three per cent, its largest weekly decline since April.
Bitcoin correlation with traditional assets
Unlike gold, which has maintained its safe-haven status, bitcoin has shown near-zero correlation with traditional defensive assets. It moves with equities, especially technology stocks, as its investor base overlaps with growth-oriented investors.
The theory that bitcoin would serve as digital gold during market stress has not been supported by recent performance. When tech declines, bitcoin often decreases more significantly due to derivatives and margin trading in crypto markets, creating a cycle that increases volatility.
Market implications
The increased short interest across bitcoin ETFs and technology subsectors indicates that some investors may be positioning for potential further declines. For IBIT, the increase from 0.02 per cent to 0.6 per cent short interest represents a significant increase for an ETF this year.
Figure 1: Short interest across US Tech sectors
This positioning suggests that gains in both bitcoin and technology stocks may be more difficult to achieve. The coming weeks may bring increased volatility as markets reassess valuations, particularly for assets whose prices have been driven by enthusiasm rather than current financial performance.
As short sellers increase their positions against these sectors, market participants will determine whether this represents a temporary correction or a more sustained shift in market leadership away from the technology and cryptocurrency prominence that has characterised much of 2025.
Bitcoin ETFs face short pressure
The iShares Bitcoin Trust (IBIT), one of the largest bitcoin ETFs, has seen an increase in short interest from 0.02 per cent at the beginning of the year, to approximately 0.6 per cent currently. This increase indicates concerns among institutional investors about bitcoin's near-term prospects.
The increase in IBIT short interest reflects a reassessment of risk in the cryptocurrency space. Investors who previously viewed bitcoin as a potential inflation hedge are now seen to be treating it as a high-beta tech stock, a leveraged bet on risk appetite in financial markets. Bitcoin has declined approximately 27 per cent from its October all-time high of US$126,000 over the last few weeks.
Tech sector under pressure
The technology sector, which has been correlated with bitcoin performance, is experiencing similar short selling pressure. North America software and services companies have short interest of 0.826 per cent, while semiconductor and semiconductor equipment firms show short interest reaching 0.285 per cent, some of the highest levels seen this year.
This parallel development is not coincidental. Bitcoin's correlation with the Nasdaq 100 currently stands at approximately 0.80 — near decade highs — indicating that digital assets and technology stocks are increasingly moving in tandem.
Catalysts behind the short interest increase
Several factors have contributed to the rising short interest:
Valuation concerns. The tech sector's forward P/E ratio has reached approximately 32x compared to its 10-year average of 22x, creating what is viewed as a premium.
Liquidity conditions. Rising bond yields and tighter financial conditions have reduced appetite for risk assets.
Institutional outflows. Bitcoin ETFs saw over US$1.1 billion in outflows in one week, similar to withdrawals from equity funds.
Macroeconomic uncertainty. Weak consumer sentiment data and concerns about sustainable growth have prompted investors to reduce exposure to speculative assets.
AI stocks affected
Companies associated with artificial intelligence have experienced selling pressure. Super Micro Computer declined 23 per cent last week as short interest increased to 13 per cent of its outstanding shares, while Nvidia fell seven per cent while also displaying growth in short interest.
The sell off reduced market value of AI-linked stocks by approximately US$820 billion in one week, with the Nasdaq Composite falling about three per cent, its largest weekly decline since April.
Bitcoin correlation with traditional assets
Unlike gold, which has maintained its safe-haven status, bitcoin has shown near-zero correlation with traditional defensive assets. It moves with equities, especially technology stocks, as its investor base overlaps with growth-oriented investors.
The theory that bitcoin would serve as digital gold during market stress has not been supported by recent performance. When tech declines, bitcoin often decreases more significantly due to derivatives and margin trading in crypto markets, creating a cycle that increases volatility.
Market implications
The increased short interest across bitcoin ETFs and technology subsectors indicates that some investors may be positioning for potential further declines. For IBIT, the increase from 0.02 per cent to 0.6 per cent short interest represents a significant increase for an ETF this year.
Figure 1: Short interest across US Tech sectors
This positioning suggests that gains in both bitcoin and technology stocks may be more difficult to achieve. The coming weeks may bring increased volatility as markets reassess valuations, particularly for assets whose prices have been driven by enthusiasm rather than current financial performance.
As short sellers increase their positions against these sectors, market participants will determine whether this represents a temporary correction or a more sustained shift in market leadership away from the technology and cryptocurrency prominence that has characterised much of 2025.
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