Strategy becomes most heavily shorted U.S. stock – but don't assume pure bearishness
The market for Bitcoin-holder Strategy (MSTR) shares is among the most “heavily shorted,” a market slang term for dominance of bearish plays, according to FactSet and Goldman Sachs data. Yet the positioning may not reflect investor bias toward a continued price crash, per some observers. According to the report released last week, bearish short bets on Strategy (MSTR) equaled 14% of its market capitalization of $34 billion at the time, making it the most shorted stock by that measure. Cryptocurrency exchange Coinbase (COIN) ranked fourth at 11% of its market cap. The report tracked positioning in stocks with market capitalization of over $25 billion. This comes as Strategy is sitting on roughly a $7 billion unrealized loss on its bitcoin holdings. That figure, however, has no impact on the stock in the near term. Strategy began adding $BTC to its balance sheet in 2020 and has since gobbled up 717,722 $BTC, worth $47 billion. As of writing, its market cap stood closer at $42 billion, despite the stock falling 20% year-to-date. One explanation for the elevated short interest offered by analysts is the basis trade – a strategy that seeks to profit from the price difference between two related markets. In this context,
