The Looming Short Squeeze in MSTR

I think Strategy $MSTR has the potential to pop higher, and shorts may have overstayed their welcome.

The stock has been absolutely crushed, and rightly so. The valuation was ludicrous, and now it’s settled back down to Earth.

Back in November 2024, it was trading at roughly 3.5x more than it was actually worth. Today, it’s actually trading for less than what it’s worth.

That’s because investors have finally cottoned on to the fact that there are better ways to express a bullish bet on Bitcoin, and their flywheel of issuing stock to buy more Bitcoin was unsustainable.

I still think it will continue to be unsustainable, which is why I’ve been vocal in saying I’ll never invest in Strategy $MSTR again.

The model is broken, and the company now has a tonne of liabilities that will act as a permanent headwind. My bet is that the stock gradually underperforms Bitcoin over time and falls into irrelevance.

But setting aside my longer-term views, in the short term I think MSTR has a short squeeze written all over it.

Volatility is compressed, Bitcoin looks ready to pop higher, and short interest is at 52-week highs.

If this thing rips, it’s a sentiment and positioning unwind.

Nothing has changed about their model, so don’t be fooled otherwise.

I’m avoiding the stock, but I think it has a bounce written all over it.

Cheers,

Louis Sykes
Senior Crypto Analyst, All Star Charts