Among major corporations, few stocks tie their fortunes as directly to cryptocurrency sentiment as Strategy. This week, the equity with the highest level of short interest among large global firms found itself caught in a crypto rebound, compelling numerous short sellers to exit their positions. This situation highlights a volatile combination of Bitcoin exposure, leveraged corporate strategy, and tactical trading maneuvers.
A Crowded Trade Meets a Crypto Catalyst
Data from Goldman Sachs and FactSet identifies Strategy as the most heavily shorted stock globally for companies valued over $25 billion. Bets against the company amount to approximately 14% of its total market capitalization.
The catalyst for movement arrived on Tuesday when Bitcoin surged roughly 7%. In such a scenario, short sellers often face mounting pressure. Rising prices can force them to buy back shares to cover their positions and limit losses, a process known as short covering. This very mechanism amplified the upward move in Strategy’s stock, creating a feedback loop.
Even with recent gains, the stock’s position remains precarious. It closed at €114.90 on Wednesday. While it has advanced 4.45% over the past seven days, it still shows a significant decline of 14.35% when measured across the preceding 30-day period.
The 100th Bitcoin Purchase and Mounting Paper Losses
Further attention came from a company announcement on Sunday. Strategy disclosed its 100th Bitcoin purchase since initiating its accumulation strategy in August 2020. The latest transaction involved 592 BTC acquired for about $39.8 million. This purchase was funded by selling 297,940 Class A shares via an at-the-market offering program.
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The company’s total holdings now stand at 717,722 BTC. These were acquired for a total of $54.56 billion, resulting in an average purchase price of $76,020 per Bitcoin. A significant challenge emerges here: with Bitcoin trading near $69,000, analysts at CoinDesk estimate Strategy is sitting on roughly $7 billion in unrealized book losses. This gap underscores how critically the company’s balance sheet is tethered to Bitcoin’s price performance.
Decoding the Short Interest: Not All Bets Are Bearish
It’s crucial to understand that a high short interest does not always equate to a purely negative outlook on the stock. According to CoinDesk, a portion of this activity is attributed to basis trading. In this arbitrage strategy, traders gain Bitcoin exposure—for instance, through the iShares Bitcoin Trust (IBIT)—while simultaneously shorting Strategy stock. The goal is to profit from pricing discrepancies between the stock’s valuation and the underlying value of its Bitcoin holdings.
CoinDesk points to Jane Street as an example. The trading firm reported holding over 7 million shares of IBIT alongside a substantial position in Strategy stock. Furthermore, regulatory filings show that as of December 31, 2025, about 53 hedge funds held shares of Strategy, accounting for approximately 3% of its free float.
The Path Ahead Hinges on Bitcoin
The coming weeks will be decisive. The key variable is whether Bitcoin can sustain its recovery. If it does, the likelihood of further short covering in Strategy shares increases. Conversely, if Bitcoin reverses course and declines anew, pressure will intensify on the company’s model of financing further Bitcoin purchases through equity sales.
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