MicroStrategy Faces $180M in Failed Trades, Potential Short Squeeze Looms
More than 609,000 shares of MicroStrategy (MSTR), valued over $180 million, failed to settle in March due to delivery failures associated with short selling, as per SEC and Fintel data. These Failures to Deliver (FTDs) suggest potential market volatility, with large unfulfilled trades implying a buildup in pressure as short sellers struggle to cover positions due to rising MSTR stock prices. As of April, short interest in MSTR remains high, with over 12% of shares sold short. This situation could trigger a short squeeze, as short sellers may be forced to buy back shares to cover their positions, potentially leading to significant price movement. The frequent and large-scale FTDs indicate that traders should be cautious of a possible breakout or breakdown in MSTR stocks, possibly influencing similar trends observed in Bitcoin markets.
Bullish
The high volume of failed-to-deliver trades and significant short interest in MicroStrategy’s stock indicate that a short squeeze could be imminent. Given the stock’s recent upward price movement and the historic context of how shorts are often forced to cover under price pressure, MSTR’s stock could see further upward momentum. This kind of market condition can lead to heightened buying activity as short sellers scramble to cover positions, pushing prices even higher. Such dynamics are generally viewed as bullish in the immediate term, potentially attracting more speculative trading activity and reflecting similarly in correlated markets like Bitcoin.