Crypto Stocks Circle, Coinbase, and MSTR Rally Causing $500 Million Hedge Fund Loss

Key Insights:

• Circle stock price gained 35% after the stablecoin issuer disclosed strong Q4 2025 results, with 72% surge in USDC adoption.
• Other crypto stocks like Coinbase (COIN) rose 13.5% and Strategy (MSTR) gained 8.8%, on expansion plans and crypto market recovery.
• Strategy (MSTR) is now the most shorted large-cap U.S. stock, with short interest at 14% of market cap

Top crypto stocks like Strategy (MSTR), Circle (CRCL), and Coinbase (COIN) were on a roll on Wall Street during Wednesday’s trading session on Feb. 25. With Bitcoin price staging 10% upside in two days, the bullish momentum in crypto is picking up once again. During Q4 2025, USDC issuing firm Circle posted strong revenue numbers, with 77% upside year-over-year.

Crypto Stock Circle (CRCL) Jumps 35%, Causing $500 Million Loss to Hedge Funds

On Feb. 25, the circle (CRCL) stock price shot up 35% amid strong Q4 earnings. Following this pump, researchers at 10x Research noted that hedge funds face $500 million loss in a short squeeze.

While the earnings results provided the initial catalyst, market analysts said the scale of the rally was largely driven by positioning. Leading into the print, hedge funds had built significant short exposure in Circle. A February 20, 2026, market update had flagged the setup as vulnerable to a high-probability short squeeze.

Circle stock rally and hedge fund loss | source: 10x Research

In a subsequent report dated February 21, Circle stock was highlighted as a top technical setup. Analysts noted rapid asset accumulation in the IQMM Genius Money Market ETF, which raised $18 billion within days. The pace and magnitude of those inflows led to this bullish case outlook.

USDC stablecoin issuer Circle reported strong growth across key metrics in the fourth quarter of 2025. Expanding USDC adoption and higher reserve income were the key growth drivers.

USDC in circulation reached $75.3 billion at year-end, up 72% from the previous year. On-chain transaction volume for USDC totaled $11.9 trillion during Q4, representing a 247% surge.

Moreover, Circle’s total revenue and reserve income for the quarter came in at $770 million, up 77% year over year. Net income from continuing operations rose sharply to $133 million in Q4, up $129 million from the previous period.

The sharp move in Circle stock also coincided with outsized volatility in Coinbase (COIN) and MSTR stocks. Thus, the Coinbase stock gained 13.5% on Feb. 25, while the MSTR stock gained 8.8% during yesterday’s trading session.

Crypto Stock Coinbase (COIN) Jumps 13% On Expansion

Cryptocurrency exchange Coinbase (COIN) is now expanding its portfolio by introducing stock trading and ETF trading. This comes as part of the company’s plan to become an “all-in-one” platform and compete with players like Robinhood.

The rollout allows users to trade U.S.-listed stocks and ETFs directly, as well as cryptocurrency. Trading is available 24 hours a day, from Monday to Friday, and is offered commission-free. Users can fund their trades in U.S. dollars or USDC, with fractional share purchases starting as low as $1.

On Feb. 25, the Coinbase stock price jumped 13.5%, closing at $184. However, the COIN stock is still trading 22% down since the beginning of 2026.

Crypto exchange Coinbase has also entered into a partnership with Yahoo Finance, to support the recently introduced equity trading feature. This feature will allow users to move from researching a stock to executing a trade on the exchange with a single click. In addition, Yahoo Finance will integrate Coinbase’s real-time market data into its interface.

Source: X

On the other hand, crypto analyst Javon Marks noted that COIN stock has bounced from the broadening wedge pattern. According to the analyst, this opens the door to a rally to $600.

Will MSTR Stock See A Short Squeeze?

MSTR, the native stock of Michael Saylor’s Strategy, jumped 8% on Feb. 25. The MSTR stock is showing signs of a strong bounce back and is up 25% from its February lows of $106.

Strategy (NASDAQ: MSTR) has become the most shorted large-cap stock on Wall Street, according to Goldman Sachs data. Short interest in the MSTR stock has climbed to approximately 14% of its market capitalization.

Strategy currently holds 717,722 Bitcoin acquired at an average price of $76,020 per coin. With Bitcoin trading near $66,000, the company is sitting on an estimated $7 billion in unrealized losses.

Market participants note that elevated short positioning could amplify volatility. If Bitcoin stages a strong rebound, the heavy short exposure in MSTR could create conditions for a significant short squeeze. Popular analyst IncomeSharks noted that the MSTR stock could flip the Super trendline in March or April 2026. This could mark the setup for the next surge in MSTR stock.

MSTR stock super trendline | Source: TradingView

Jane Street has significantly increased its exposure to Strategy (NASDAQ: MSTR) in recent months. The quantitative trading firm boosted its stake by approximately 473%. The firm now holds about 7.3% of the company’s outstanding shares, according to the latest disclosures.

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