MicroStrategy (MSTR) has become the U.S. stock with the highest short interest relative to its market capitalization, reaching 14%. This trend is linked to a sophisticated basis trade strategy involving the burgeoning spot Bitcoin ETF market. Analysts suggest that the high short interest is not a bearish signal on MicroStrategy's fundamentals but rather an arbitrage opportunity exploiting the price relationship between MSTR shares and the Bitcoin held on its balance sheet. The strategy involves a paired trade where traders go long on a spot Bitcoin ETF, such as the iShares Bitcoin Trust (IBIT), while shorting MicroStrategy stock. This approach aims to profit from the premium at which MSTR shares trade relative to the net asset value of its Bitcoin holdings. Despite the strategy's potential, it has faced challenges in 2025, with MSTR's stock price declining by 20% and IBIT experiencing a 27% drawdown, resulting in a negative return for the trade.