Will Bitcoin Giants Strategy and Coinbase Withstand Intensified Short-Seller Attacks?

▲ Strategy (MSTR), Bitcoin (BTC)/ChatGPT-generated image ©

Large institutional capital has placed bets on declines in crypto-related stocks, making Strategy (MSTR) and Coinbase (COIN) the most heavily shorted targets on Wall Street.

According to crypto media outlet Decrypt on February 26 (local time), an analysis of the latest data from Goldman Sachs showed that among companies with market capitalizations exceeding $25 billion, Strategy and Coinbase recorded short-interest ratios of 14% and 10% of market cap, ranking first and fourth, respectively. Matt Hougan, Chief Investment Officer at Bitwise, compared the crypto market’s extreme love-it-or-hate-it sentiment to a high-stakes gamble, saying it is not surprising at all that these companies rank near the top for short interest.

Over the past six months, Bitcoin (BTC) has plunged more than 45% from its all-time high of $126,080 to $68,614, dealing a direct blow to these companies’ share prices. Strategy, the world’s largest corporate holder of Bitcoin, saw its stock tumble 60% during the same period, while unrealized losses at the Michael Saylor-led firm have ballooned to $5.3 billion.

Some have raised concerns that if the stock falls further, Strategy could be forced to sell Bitcoin to service its debt. However, users of the decentralized prediction market Myriad estimate the likelihood of a sale within the year at less than 15%. Hougan dismissed outright bearish bets predicting that a drop in Bitcoin’s price would immediately lead to corporate insolvency, arguing that such views completely misread the company’s balance sheet and that short positions in Strategy are largely used for arbitrage purposes.

Coinbase has also seen its shares fall about 40% over the past six months and reported fourth-quarter results below expectations. Nevertheless, analysts at Bernstein contend that the current share price of around $167 is too undervalued to justify selling. In addition, several companies closely tied to the crypto ecosystem—including CoreWeave (CRWV), Robinhood (HOOD), and PayPal (PYPL)—have appeared on the list of heavily shorted stocks, underscoring the challenging macroeconomic environment.

Disclaimer: This article is for investment reference only and we are not responsible for any investment losses resulting from it. The content should be interpreted for informational purposes only.