Discharge of responsibility: The analyst who wrote this piece has Strategy actions (MST)
Merchant shortening strategy (MSTR), Bitcoin’s buyer whose shares priced won 13% in March, may be struggling to find enough actions to pay the lenders who supported their bets for the value of the company.
More than $ 180 million in Operations in MSTR shares failed to resolve last month, according to the data of the SEC and Fintel. These events, known as delivery failures (FTD), occur when a seller does not deliver actions to the buyer before the liquidation deadline, now only one business day after the operation (T+1).
The FTDs can result from administrative errors or slow liquidation systems, but they can also indicate that short vendors, who borrow actions and sell them with the hope that they can buy them at a lower price when it comes to returning them to the lender, have difficulty finding enough actions to repurchase. That is often a sign that a great movement can come in any direction.
As the price of the strategy increased during March, MSTR registered multiple large FTD, even March 26, when more than 186,465 shares could not be established, worth almost $ 64 million, according to Fintel data. Other high -volume days include March 17 and 21, where combined failed deliveries totaled tens of millions of dollars. In total, 609,000 shares did not meet during the month, a notable amount for a single action.
The short interest remains elevated in the stock. As of April, around 29 million shares are sold short, more than 12% of all publicly available shares, according to Fintel Data. The data also show that approximately one third of MSTR operations on April 22 were short sales executed out of exchange in private places such as Dark Pools. While these operations are completely counted in official short interest reports, the lack of transparency prior to trade makes it more difficult for the public to track short sales activity in real time.
The price of Mstr’s shares has recently been rising. It has earned 35% since the beginning of March, has increased 44% of the minimum of April and recovered 8% on Tuesday. As the price increases, short vendors can be forced to buy shares to cover their positions, especially if they cannot borrow anymore.
This scenario can trigger a brief squeery, a strong increase in the price caused by short coverage: short vendors seeking to buy to cover their bets. That is a dynamic that the market has already seen in Bitcoin (BTC) in the last 24 hours.
While FTDs do not necessarily indicate price manipulation or predict a squeery, their size and frequency in MSTR suggest a possible break or breakdown driven by short vendors.
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