Haciyev Reşit 
Due to its strong correlation with Bitcoin, shares of Strategy (MSTR) are closely monitored by investors, and short positions in the stock have reached record levels. Recent sharp volatility in Bitcoin’s price has also increased fluctuations in MSTR shares, prompting investors to reshape their positioning strategies. However, according to experts, the rise in short interest does not necessarily reflect a direct expectation of a market decline; rather, it stems from hedging and portfolio balancing strategies. Institutional investors are reportedly acting more cautiously amid volatility in Bitcoin and crypto-related assets and have begun using MSTR shares as a hedge instrument. This development highlights that MSTR is now viewed not only as a technology stock but also as an indirect Bitcoin investment vehicle.
MSTR Seen as a “Leveraged Bitcoin Proxy”
Since 2020, Strategy has been known for its aggressive Bitcoin purchases, effectively transforming into what many investors see as a leveraged Bitcoin exposure vehicle. The company’s large BTC holdings on its balance sheet have made its stock performance highly sensitive to Bitcoin’s price movements. As a result, MSTR shares typically rise faster during Bitcoin rallies and decline more sharply during downturns. According to recent data, short positions in MSTR amount to roughly 14% of the company’s total market capitalization. Similarly, short interest in Coinbase has reportedly climbed to around 11%. Analysts note that these levels are significantly high compared to normal market conditions and emphasize that the growing short activity is directly linked to risk management and hedging strategies rather than outright bearish speculation.
Experts suggest that the heavy short interest in MSTR shares is primarily part of a hedging approach. In particular, institutional players investing in Bitcoin ETFs open short positions in MSTR to balance their portfolios.
The core logic of this strategy works as follows:
If Bitcoin falls, ETF investments lose value, while MSTR shares generally decline more sharply. In this case, gains from the MSTR short position can offset losses on the ETF side. If Bitcoin rises, profits from the ETF increase, while potential losses on the MSTR short position may remain relatively limited.
For this reason, investors are using MSTR short trades less as a “Bitcoin will fall” speculation and more as a portfolio balancing tool.
The Strategy Has Not Worked as Expected This Year
However, according to analysts, this hedge strategy did not perform as expected in 2026. Under normal conditions, MSTR shares were expected to fall more sharply than Bitcoin, allowing short positions to compensate for ETF losses. Yet price movements throughout the year did not fully support this theoretical balance, limiting the strategy’s effectiveness. As of 2026, MSTR shares have declined by approximately 20%, while iShares Bitcoin Trust (IBIT), one of the largest spot Bitcoin ETFs, has dropped around 27%. This outcome shows that investors employing the “ETF long – MSTR short” strategy did not receive the level of protection they anticipated.
In other words, despite Bitcoin’s decline, MSTR shares fell less than the ETF, and gains from short positions were insufficient to fully offset ETF losses. In theory, MSTR should have declined more aggressively during a Bitcoin downturn, generating meaningful hedge gains. In practice, the larger losses in ETFs prevented this strategy from delivering the expected protection. This may prompt institutional investors to reassess crypto-linked hedging methods.
Evaluation
The record level of short positions in Strategy shares does not necessarily signal growing bearish expectations in the market. On the contrary, it reflects increasingly sophisticated risk management strategies among investors exposed to Bitcoin and crypto-related assets. However, recent data suggests that popular protection methods such as “ETF long – MSTR short” do not always function as intended. Diverging price dynamics between Bitcoin and MSTR may lead investors to revisit and refine their hedge strategies moving forward.
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