MicroStrategy's Winning Streak: How Bitcoin Holdings Sparked a $1.92B Blow to Short Sellers

Zinger Key Points
  • Short sellers lose $1.92B betting against MicroStrategy as stock outperforms Bitcoin, fueled by ETF launches.
  • MicroStrategy's bitcoin holdings boost drives stock surge; company raises funds for more bitcoin amid rising bond refinancing costs.

MicroStrategy Inc MSTR has witnessed a significant downturn in the fortunes of short sellers betting against it, with losses amounting to $1.92 billion since March, as revealed by S3 Partners. 

This financial hit underscores the rally that enabled MicroStrategy’s stock to surpass Bitcoin in performance. 

The introduction of several spot bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC) in January has played a crucial role in bringing the cryptocurrency asset class into the mainstream, Reuters reports.

In addition to MicroStrategy’s losses, traders who placed bets against crypto exchange Coinbase and bitcoin miner CleanSpark, Inc CLSK also faced substantial losses, totaling $593.50 million and $106.40 million, respectively. 

MicroStrategy, holding nearly 190,000 bitcoins by the end of 2023, plans to increase its bitcoin holdings further, having raised funds through the sale of convertible debt twice in a single week last month for this purpose.

Analysts at BTIG have noted that MicroStrategy’s premium is driven by investors seeking bitcoin exposure who might need more means to invest directly in Bitcoin or its ETFs. 

The company’s efforts to raise capital for additional bitcoin purchases were seen as a positive move for shareholders.

Recent reports indicated MicroStrategy is navigating tough waters. The rise in bitcoin’s value has increased the cost of refinancing its convertible bonds by 280%. 

Since issuing this debt towards the end of 2020, MicroStrategy’s stock has witnessed a staggering increase of about 390%.

MicroStrategy stock surged 363% in the last 12 months. Investors can gain exposure to the stock via First Trust SkyBridge Crypto Industry And Digital Economy ETF CRPT and Advisor Managed Portfolios Miller Value Partners Appreciation ETF MVPA.

Price Action: MSTR shares traded lower by 2.06% at $1,533.81 on the last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image: Eivind Pedersen from Pixabay

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