I just noticed that MSTR has become the most shorted stock in the US market—14% of its market cap. But don’t jump to the conclusion that this is purely a bearish signal, because the situation is more complex than that.

It turns out that most of these short positions are likely basis trades—traders buy spot bitcoin ETFs while shorting MSTR to profit from the price difference between the two. Jane Street recently bought a fairly large ETF position and also holds MSTR, which suggests this is more of a pair trade strategy than a direct bearish bet. Looking at performance, MSTR is down 20% this year while the ETF is down 27%, so this strategy hasn’t worked out yet.

MSTR itself is currently holding 717.722 BTC with a value of about USD 47 billion. Its current market cap is around USD 42 billion, even though its unrealized loss is about USD 7 billion from its bitcoin position. But that loss figure doesn’t immediately impact the stock price in the short term. Bitcoin itself is still struggling around USD 74,000 after it briefly broke above USD 76,000, and the funding rate on perpetual contracts has remained negative for 46 days, indicating persistent bearish sentiment. So this situation is more about positioning games than actual bearish fundamentals.