Strategy Hit by $6 Billion Short-Selling Bomb as Bitcoin Falls, Bankruptcy Risk Looms

▲ Strategy, Bitcoin (BTC) / AI-generated image

Amid Bitcoin (BTC) price declines, Strategy has become the most heavily shorted large-cap stock in the United States, with short positions totaling $6 billion.

According to cryptocurrency media outlet The Crypto Basic on February 27 (local time), as Bitcoin’s price stalled, short-selling pressure against Strategy intensified to record levels, reaching an unprecedented $6 billion in short interest. The company now holds the highest short interest ratio among U.S. mega-cap stocks, reflecting growing bearish sentiment in the market.

Short sellers are targeting what they see as an excessive premium in Strategy’s share price relative to the value of its Bitcoin holdings. As Bitcoin’s price declined, investors judged that Strategy’s stock was trading far above its underlying asset value and sharply increased their bets on further downside. Although management, including CEO Phong Le, continues to pursue its Bitcoin accumulation strategy, market skepticism appears to be deepening.

The surge in short interest is adding downward pressure on Strategy’s stock, coinciding with tightening liquidity in the Bitcoin market. In particular, as Bitcoin slipped below the $70,000 level, concerns over Strategy’s leveraged structure intensified, prompting greater participation from institutional investors in short-selling activity. This marks a stark contrast to the company’s aggressive buying stance over the past several years.

If Bitcoin stages a sharp rebound, a short squeeze could occur, forcing short sellers to repurchase shares to cover their positions and limit losses. Paradoxically, the massive $6 billion in short positions could serve as significant latent buying pressure capable of fueling a rapid surge in the stock price if upward momentum returns. Strategy’s shares are currently caught in a fierce battle between Bitcoin’s price movements and short-selling forces.

Strategy is expected to remain at the center of the market, continuing to act as a barometer for Bitcoin price volatility. As institutional selling pressure persists, whether Bitcoin can secure key support levels will likely be the decisive factor in determining Strategy’s stock trajectory. Investors are closely analyzing the company’s price-to-asset ratio amid heightened market volatility.

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