MicroStrategy (NASDAQ: MSTR), the world's largest public corporate holder of Bitcoin, has become the most heavily shorted large-cap stock in the United States. As of February 2026, short interest in the company has reached roughly 14% of its market capitalization, placing it at the top of the global short interest rankings.
The company, led by Michael Saylor, is facing significant financial pressure due to its massive Bitcoin treasury. According to CoinGecko data, MicroStrategy holds 717,722 BTC, purchased at an average price of approximately $76,000. With Bitcoin trading near $66,000, the company is sitting on an estimated $7 billion in unrealized paper losses.
This situation has triggered a wave of institutional exits. Angeles Wealth Management and Wealth Watch Advisors have fully exited their MSTR positions. Caitlin John LLC slashed its exposure by 96%, while Kovitz Investment Group and Atomi Financial Group also significantly reduced their holdings. These moves signal eroding confidence in the corporate Bitcoin treasury model among some institutional investors.
However, analysts like Tom Lee of Fundstrat argue the bearish sentiment may be overplayed. In a post on X, Lee warned that when a short trade becomes "consensus," bad news is often already priced in, making upside price squeezes more likely. He suggested the crowded short position could paradoxically lead to price resilience.
The high short interest is driven by complex structural factors rather than simple bearish bets. A significant portion is tied to institutional "basis trades," where firms buy Bitcoin spot ETFs (like BlackRock's IBIT) while simultaneously shorting MSTR shares to profit from pricing inefficiencies between the stock and its underlying Bitcoin value. Furthermore, hedge funds are shorting the stock as a delta hedge against MicroStrategy's sizable $6 to $8 billion in convertible debt, a standard arbitrage practice for risk management.
The company plans to manage its leverage by converting around $6 billion of this debt into equity over the coming years. Despite the intense short pressure, 14 out of 16 brokerage firms maintain "Strong Buy" ratings on the stock. The ultimate trajectory for MSTR is seen as intrinsically linked to Bitcoin's next major price move, with the potential for a sharp short squeeze if positive catalysts emerge.
