It’s been a rough year for Coinbase Global Inc (NASDAQ:COIN) investors, with the stock down more than 64% year-to-date overall even after a big 41.2% gain this week following a new cryptocurrency deal with BlackRock Inc (NYSE:BLK).

While Coinbase bulls celebrate the long-awaited good news, Coinbase short sellers are getting torched.

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Fortunately for Coinbase shorts, many of them locked in their profits prior to Thursday, with 2.8 million short shares covered in the past 30 days. Short interest now represents 16.7% of Coinbase’s public float.

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Short Squeeze Coming? Coinbase shorts are feeling the pain, and Dusaniwsky said the short covering trend may continue following Thursday's big rally.

“COIN was a solid squeeze candidate even before today’s price pop, but today’s move makes it a certain squeeze stock for many short sellers that have incurred significant mark-to-market losses over the last 30 and seven days,'” Dusaniwsky said.

He said the large Thursday losses may force Coinbase short sellers out of their position whether they want to exit or not.

"Forced buy-to-covers and continued long buying on the news should keep COIN at these elevated stock price levels in the near term," Dusaniwsky said.

Following Thursday's gain, Coinbase shares are now down 62.7% overall in the past 12 months while the SPDR S&P 500 ETF Trust (NYSE:SPY) is down 6.1% in that time.

Benzinga’s Take: The BlackRock deal was a big positive for Coinbase, but it was likely not enough to change many short sellers' minds. In the most recent quarter, Coinbase reported that its retail monthly transaction users fell to just 9.2 million, down from 11.4 million a year ago.

Photo: Iryna Budanova via Shutterstock