Strategy Becomes Most Heavily Shorted U.S. Stock, Possibly Driven by Bitcoin Basis Trades
Strategy, formerly known as MicroStrategy, has long financed Bitcoin purchases through debt and equity issuance, making MSTR a major Bitcoin proxy in the U.S. stock market. Because its shares are closely correlated with Bitcoin, institutional short positions do not necessarily signal a bearish view of the company and may instead form part of basis trades or paired hedges.
At the time of the relevant reports, short positions in MSTR were equivalent to 14% of the company's market capitalization, the highest proportion among U.S. stocks. Coinbase ranked fourth. Analysts said institutions may hold Bitcoin or BlackRock's spot ETF, IBIT, while shorting MSTR to trade the price spread and manage exposure.
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The history behind this eventMicroStrategy Becomes Most-Shorted U.S. Stock as Bitcoin Paper Loss Hits $7.9 Billion
MicroStrategy has bought large amounts of Bitcoin through debt and equity issuance since August 2020, closely tying its corporate balance sheet to the cryptocurrency’s price. The leveraged strategy magnifies gains in bull markets, but a downturn also increases risks to its share price, financing costs and debt-servicing capacity.
As of July 2026, the latest Goldman Sachs data showed short interest in MicroStrategy at 14%, the highest among large U.S. companies. With Bitcoin falling to about $65,000, the company was sitting on a $7.9 billion paper loss on its 717,000 Bitcoin holdings, prompting investors to reassess its highly leveraged Bitcoin strategy.
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