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Obscure and highly speculative blockchain company Bit brother (NASDAQ:BET) is finally in the news for good reason. During the midweek session, BETS stock is surging as the underlying cryptocurrency benchmark asset approaches an all-time high. Furthermore, there appears to be a short squeeze for the otherwise struggling company.
Bit Brother, considered a diverse company with operations in China, got off to a far less auspicious start this month. On February 2, management announced that it had received notification from Nasdaq regarding the exchange operator Intention to remove the list BETS stock. In the disclosure, Bit Brother noted that the decision will be appealed on February 27 (yesterday).
Nasdaq’s concerns are more than justified. Since the beginning of the year, BETS shares have lost around 61% of their market value – including today’s rally. Currently the market cap is less than $3 million. Additionally, in the fiscal year ending June 2023, Bit Brother suffered a net loss of $92.16 million with sales of just $2.88 million.
Nevertheless, crypto sentiment has reached a peak. With the benchmark blockchain asset Exceeding $63,000 For the first time since November 2021, the dramatic rebound has boosted several crypto-related companies.
BETS stock is also rising due to a possible short squeeze
While the frenzied enthusiasm for virtual currencies is likely the main catalyst for BETS stock, it may not be the only tailwind. In fact, Bit Brother’s background points to a classic speculative spark: the short squeeze.
According to Fintel it is short interest because BETS shares are at just over 162% of their free float. This is slightly supported by a short-term interest rate of 2.27 days to cover. Essentially, this is the time it takes for bears to cover their position based on average trading volume.
The outrageous metric is confirmed by Yahoo Finance short interest (As of February 15, 2024) and is 147.28%. For the avoidance of doubt, Yahoo Finance states that it obtains its short interest data from Morningstar. Combined with massive crypto demand, BETS stock could potentially continue to rise.
The upcoming halving of the benchmark asset is driving speculation in virtual currencies. This protocol reduces the rewards associated with mining activities by half, which is expected to reduce supply. Of course, a reduced supply of an important raw material should significantly increase its price.
Why it matters
Before investing in BETS stock, investors should be aware that the underlying company is extremely risky. Before the name Bit Brother, the company previously operated as Urban Tea. According to the attached Press releaseThe business at that time included the distribution and retail of specialty teas.
However, management decided to start operations in the “business of blockchain technology and cryptocurrency mining.” Over the last 52 weeks, BETS stock has plunged 99.7%.
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At the time of publication, Josh Enomoto did not hold, directly or indirectly, any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publication policies.
