Warning: The analyst who wrote this piece has shares of strategy (MSTR)
Traders Shorting Strategy (MSTR), the Bitcoin buyer whose share price won 13% in March, may have trouble finding enough actions to reimburse lenders who supported their bets, the value of the company would fall.
More than $ 180 million in MSTR shares have failed to pay last month, the DRI and the finish data show. These events, known as delivery failure (FTDS), occur when a seller does not give the actions to the buyer before the payment deadline, now one working day after trade (T + 1).
The FTDS can result from administrative errors or slow settlement systems, but may also indicate that the uncovered sellers, who borrow actions and sell them in the hope that they can buy them at a lower price when it returns to the lender, find it difficult to find enough stocks to buy. It is often a sign, a great movement in both directions can come.
As the price of the strategy increased in March, MSTR recorded several large FTDs, notably on March 26, when more than 186,465 shares failed to settle, worth almost 64 million dollars, according to finish data. Other high volume days include March 17 and March 21, when combined deliveries were totalized in tens of millions of dollars. A total of 609,000 shares did not succeed in the month, a significant amount for a single shares.
The short interest remains high in the stock. In April, approximately 29 million shares were sold short, more than 12% of all the actions accessible to the public, according to Fortel Data. The data also shows that around a third of MSTR transactions on April 22 were uncovered sales executed outside the exchange in private sites like Dark Pools. Although these trades are entirely counted in official short interest reports, the lack of prefabricated transparency makes it more difficult for the public to follow the outdated sales activities in real time.
MSTR’s action has recently climbed. He has won 35% since early March, has increased 44% compared to the lows in April and joined 8% on Tuesday. As the price increases, the uncovered sellers may be forced to buy actions to cover their positions, especially if they cannot borrow more.
This scenario can trigger a short pressure, a high increase in the price caused by short coverage – the open sellers who seek to buy to cover their bets. This is a dynamic that the market has already seen playing in Bitcoin (BTC) in the last 24 hours.
Although the FTDs do not necessarily indicate the manipulation of prices or do not predict compression, their size and their frequency in MSTR suggest a potential escape or a rupture driven by the exposed sellers.
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