High MSTR short interest seen as basis trade, not bearish bet

MicroStrategy (MSTR) has the highest short interest relative to its market capitalization in the U.S. stock market, but experts view the trend as a basis trade rather than a simple bearish bet, CoinDesk reported. MSTR's current short interest stands at 14% of its market cap, with Coinbase (COIN) also showing a high level at 11%. The outlet explained that experts see a higher probability of an arbitrage trade linked to spot BTC ETFs. This strategy involves buying a spot BTC ETF while simultaneously shorting MSTR to profit from the premium at which the company's shares trade relative to its Bitcoin holdings. However, the strategy has so far been unsuccessful this year, as MSTR has fallen 20% while the iShares Bitcoin Trust (IBIT), a leading spot BTC ETF, has declined 27%.