According to data compiled by Goldman Sachs Research, major Bitcoin investors like Strategy (MSTR) and the largest U.S. cryptocurrency exchange Coinbase (COIN) have become targets for Wall Street short sellers.
Among large companies with a market value over $25 billion, these two firms' "short interest" (the number of shares sold short but not yet covered) as a percentage of circulating shares, or "short ratio," is 14% and 10%, respectively, ranking first and fourth on the "short interest list."
In response, digital asset management firm Bitwise CIO Matt Hougan commented, "Cryptocurrencies are like cilantro—loved by some, despised by others."
Regarding MSTR and COIN becoming targets for short sellers, he admitted that market sentiment is polarized, so this outcome is not surprising at all.
According to Goldman Sachs statistics on hedge fund holdings through the end of 2025, although institutional ownership of these two companies showed no significant change in Q3 and Q4, they are among the most heavily shorted stocks, performing the weakest among the "most shorted" group.
On Thursday, MSTR fell 1.66% to around $133, having plummeted about 60% over the past six months. The main reason is Bitcoin's sharp decline after reaching a record high of $126,000 in October last year, with the price now around $68,000—down over 45% from its peak.
As the world's largest corporate Bitcoin holder, Strategy's core assets and operations are almost entirely tied to Bitcoin's price. The decline has resulted in an unrealized loss of approximately $5.3 billion on the company's books.
Pessimists in the market frequently question whether continued declines in MSTR's stock price could worsen the company's financial pressure, potentially forcing Strategy to sell some Bitcoin to pay down debt, which could trigger a chain reaction of selling. The company established cash reserves last December to cover dividends but has not ruled out the possibility of selling Bitcoin if necessary.
"Shorting MSTR has been a popular trade in recent years," Hougan observed, noting that many institutions engage in arbitrage strategies, such as "going long Bitcoin while shorting MSTR" or "buying convertible bonds while shorting the common stock."
Hougan believes these strategies are not inherently unreasonable. However, he also warns that some short sellers do not fully understand Strategy's balance sheet. He said:
"Some people mistakenly think that as long as Bitcoin falls below the company's average purchase price, Strategy will face bankruptcy risk. That interpretation is incorrect. Shorting based on this reasoning could ultimately be very costly."
Strategy founder and Executive Chairman Michael Saylor recently defended the company again, stating that even if Bitcoin drops to $8,000, the company still has the capacity to withstand it.
On the other hand, although Coinbase has a diversified business model and does not rely solely on Bitcoin, its stock has also fallen about 40% over the past six months amid the overall crypto market downturn. The company's recent Q4 earnings report was below expectations. However, when the stock price dropped to around $167, Bernstein analysts commented that the stock had become "cheap enough not to sell."
