Bitcoin Rebounds Over 50%, Short Squeeze Risk Rises for Crypto-Related Stocks
nashnova research
Bitcoin has bounced more than 50% from its intra-year low, putting heavy pressure on short sellers in three tightly correlated stocks — MSTR, ASST, and COIN — with small-cap ASST already having gone through one actual squeeze.
Bitcoin rallied 50% — so why are January buyers still underwater?
Bitcoin rebounded over 50% from this year's low, yet by late September the price sat at roughly 98% of its January level — meaning early-year buyers are still marginally in the red.
This means → a big bounce does not equal a good annual return. The starting point was high, the mid-year drop was deep, and the rally is still just filling the hole.
The real story in this rebound is not Bitcoin itself — it is the mounting pressure on short sellers in listed stocks tied to it.
Which three stocks are most tightly tethered to Bitcoin?
S3 Partners research director Leon Gross notes that Strategy (MSTR), Strive (ASST), and Coinbase (COIN) each show a return correlation with Bitcoin above 0.70.
Their correlation with the S&P 500 and Nasdaq is only about 0.4. In plain terms = these stocks trade more like Bitcoin than like the broader market.
Performance has diverged sharply: by late September, ASST had climbed to roughly 190% of its January level; MSTR sat at about 110%; COIN at just 88%.
What does a short squeeze actually mean, and how high is the risk now?
A short squeeze — a chain reaction where short sellers are forced to buy back shares, driving the price higher — is scoring elevated across all three names: MSTR briefly topped 70, while ASST hit 100 multiple times and stayed above 70 for extended stretches.
Short interest as a share of the float stands at roughly 10% for MSTR and 13% for COIN; ASST is similarly elevated on its own scale.
This reflects a large pool of capital betting these stocks will fall. If Bitcoin keeps climbing, those shorts may be forced to cover — fueling further upside.
Why has only ASST actually been squeezed so far?
From mid-July to mid-August, short positions in all three stocks declined as prices rose, but only ASST experienced an actual squeeze — a sharp price surge coinciding with falling short interest.
In plain terms = ASST is small and lightly followed; the buying pressure from short covering alone was enough to move the stock meaningfully.
By contrast, MSTR carries a market cap of roughly $65 billion and COIN about $53 billion — too large for short covering alone to generate the same magnitude of price impact.
Why are traders using stocks as a proxy for shorting Bitcoin?
The spot Bitcoin ETF IBIT carries very low short interest; S3 says it does not constitute a crowded short.
S3 suggests equity investors may be using MSTR, ASST, and COIN as substitute vehicles for a Bitcoin short. This means → the shorts in these stocks may not be a bet against the companies themselves — they may be an indirect bet against Bitcoin.
On fundamentals: Strategy holds roughly 846,000 BTC (about 4% of total circulating supply); Coinbase's revenue is directly linked to crypto trading volume; Strive manages about $2 billion in assets, holds roughly 26,000 BTC, and has a market cap of about $3 billion.
What should investors watch next?
The single verification point ahead: if Bitcoin continues to rally, will short covering in these three stocks accelerate?
If it does, ASST — the smallest by far — faces the highest squeeze probability; MSTR and COIN would need a broader market catalyst.
This reflects a bigger dynamic: the short-selling game in crypto-linked equities is no longer just a single-stock story — it is a leveraged amplifier of Bitcoin's own trajectory.
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