MSTR stock rose today as Bitcoin surged to $66,569, gaining by 5.76% in 24 hours. This comes as MSTR becomes the most shorted large-cap stock, with net short positions of nearly $4.85 billion. According to Bitmine’s Tom Lee, crowded short trades often mark meaningful lows.
MSTR Stock Rises as Tom Lee Points to Crowded Shorts
MSTR stock traded at $130.03 at press time, up by 5.69%, or $7.09, on the day. Notably, Bitcoin outperformed a broadly recovering crypto market during the same period. MSTR stock closed previously at $124.61 and trades within a yearly range of $104.17 to $457.22.
The crypto stock has a market capitalization of $39.72 billion and averages 24.14 million shares in daily volume. Those metrics frame the scale of current short exposure.
Source: Yahoo Finance
According to Goldman Sachs Global Investment Research, MSTR holds nearly $4,850,000,000 in net short positions. That figure equals roughly 10% to 11% of its market capitalization. The concentration has drawn attention from market participants tracking positioning risks.
Tom Lee, chairman at Bitmine, addressed the setup directly. He said more signs suggest a meaningful low for MSTR Stock may be in place. He added that when a stock becomes a consensus short, it often turns into a crowded trade. As a result, prices can rise even on negative headlines because markets already price in bad news.
Analyst Donald Dean also weighed in on the trading outlook. According to Dean, the MSTR strategy depends on Bitcoin finding a bottom. He said once the Bitcoin price stabilizes, MSTR often starts moving. He also noted potential frontrunning of MSTR before a Bitcoin move and identified lower support at $100.
Why The Stock Is the Most Shorted Large-Cap Stock
The scale of short interest links closely to a popular hedge strategy. According to deadalnix on X, traders target MSTR stock because of what they call the premium trade. At its core, the company accumulates Bitcoin, which shapes the debate over its valuation.
As Coingape reported, recently, there have been questions about whether MSTR will outperform BTC. Traders compare the value of MSTR’s Bitcoin holdings with its enterprise value. Often, the two figures diverge. Wall Street commonly expects those values to converge over time.
To isolate that convergence, some funds go long Bitcoin and short MSTR. If Bitcoin rises, gains on the long position offset losses on the short. However, if Bitcoin falls, losses on Bitcoin may offset gains on the MSTR short.
However, traders profit when MSTR’s enterprise value converges with its Bitcoin holdings. Currently, MSTR’s mNAV is near 1.2x. That means the company trades at about 1.2 times the value of its Bitcoin holdings. Deadalnix also noted that Wall Street bets that the mNAV will still fall below 1x, which is why the stock is also heavily shorted.