Strategy’s market capitalization surges $7 billion in two days as short squeeze takes hold

Strategy Inc., formerly known as MicroStrategy, added $7 billion to its market capitalization over two days as a short squeeze (rapid buying by bearish traders closing positions) began to develop. The catalyst was executive chairman Michael Saylor’s signal that the company plans to continue buying Bitcoin quarterly and would “not sell holdings.” Strategy had become the most shorted large-cap stock on the planet earlier this year, with short interest at approximately 4% of its market capitalization in February. By late July, short interest had risen to roughly 9% of the stock’s float, or about 32.48 million shares, representing approximately $3 billion in notional bets against the company. Analyst Tom Lee had warned earlier in the year that bearish investors appeared to be overleveraged, leaving MSTR vulnerable to a sharp upward move. Strategy did sell 3,588 BTC for approximately $216 million in early July to meet dividend obligations, providing a caveat to Saylor’s stated policy. The company has also reported approximately $7 billion in unrealized losses on its Bitcoin holdings, while its stock remains closely correlated with Bitcoin’s spot price and tends to move more sharply. The roughly $3 billion in short interest still outstanding by late July could keep pressure on bearish traders if Bitcoin holds or rises, while future quarterly Bitcoin purchases may further strengthen the bullish case.