Analysis of March's $180M Trade Settlements Suggests Potential Market Movements
More than $180 million in trades of Strategy shares failed to settle in March, indicating increasing pressure within the stock.
Key Insights:
- Over 609,000 shares of MSTR with a total value exceeding $180 million were unable to settle in March, based on data from the SEC and Fintel.
- There were significant spikes in failed trades, including more than $63 million on March 26, highlighting problems connected to short selling.
- Such failures might indicate upcoming volatility in stock price.
Context on Failures to Deliver:
Failures to Deliver (FTDs) occur when sellers fail to provide shares to buyers by the settlement deadline (T+1). This may arise from administrative glitches or indicate issues for short sellers in repurchasing enough shares. High instances of FTDs imply heightened action ahead.
Market Dynamics:
As the price of MSTR surged in March, the stock experienced several FTD events, particularly on March 26 where 186,465 shares valued at nearly $64 million failed to settle. March 17 and 21 recorded tens of millions collectively in failed trades, marking a significant metric for a single stock.
Short interest is noted to be high, with around 29 million shares shorted as of April, representing over 12% of all publicly traded shares. On April 22, about one-third of trades were short transactions handled in private venues, complicating public tracking of such activities.
The recent uptrend in MSTR shares, rising 35% since early March and 44% from April lows, leads to potential buyer pressure from short sellers needing to cover their positions. This could instigate a short squeeze, resulting in swift price increases, a scenario familiar from recent market behavior observed in bitcoin.
