Recent data from Goldman Sachs Research has identified Strategy (MSTR) and Coinbase (COIN) as two of the market’s most shorted stocks. These companies have become popular targets for investors wagering against the declining cryptocurrency market, with their stocks experiencing significant drops of approximately 60% and 40%, respectively, over the past six months.
MSTR and COIN occupy the top spots in short interest relative to their market capitalizations, with 14% and 10% of their shares being shorted among firms valued at $25 billion or more. Matt Hougan, Chief Investment Officer of Bitwise, remarked on the nature of crypto investments, likening them to cilantro—people either love or hate them. This sentiment reflects the volatility surrounding crypto equities.
The data, drawn from hedge fund holdings at the end of 2025, does not show significant changes in ownership for either company from the third to the fourth quarter, though both have performed poorly relative to other major shorted stocks. Of note, shares of MSTR briefly rose about 9% on a recent Wednesday, reaching approximately $135, yet the firm’s stock has plummeted sharply due to Bitcoin’s decline from its all-time high of $126,080 in October. Bitcoin is now trading at around $68,614, marking a drop of more than 45%, and significantly impacting MSTR’s financial health, which has resulted in unrealized losses of nearly $5.3 billion.
Concerns loom over whether MSTR might be forced to liquidate some Bitcoin holdings to mitigate debt obligations if the stock price continues to falter. The company has set aside a cash reserve to cover stockholder dividends but has not completely dismissed the possibility of selling Bitcoin in the future. Predictions from users on Myriad, a prediction market platform, suggest a less than 15% chance that MSTR will sell Bitcoin by the end of 2026, a significant decrease from just two weeks earlier when this figure surpassed 35%.
Shorting MSTR has become a favored trading strategy in recent years, with some investors executing arbitrage trades that involve simultaneously going long on Bitcoin while shorting MSTR or its convertible bonds. While Hougan recognizes the appeal of these trades, he cautions that many traders may misunderstand MSTR’s balance sheet, mistakenly believing the firm is at risk of bankruptcy if Bitcoin’s value drops below their acquisition costs. He contends that such beliefs are misguided, stating, “this is, of course, wrong, and anyone shorting for this reason will learn they are wrong the hard way.”
Michael Saylor, the firm’s CEO, has defended MSTR against these concerns, asserting that the company would remain solvent even if Bitcoin were to plummet to $8,000.
Coinbase shares have also suffered in tandem with the downturn in crypto prices, dropping around 40% over the last six months despite holding positions in the market. After missing fourth-quarter earnings projections, COIN’s stock was priced at about $167, leading Bernstein analysts to assert that the stock appeared “too cheap” to sell. This was bolstered by a 14% rise on a recent Wednesday, bringing the shares above $184, although they remain significantly lower than their 52-week high of $444.
Other companies with connections to cryptocurrency, such as CoreWeave (CRWV), Robinhood (HOOD), and PayPal (PYPL), are similarly featured on the shorted stocks list, as investor uncertainty continues to characterize the beleaguered crypto market.
