Metaplanet Faces Major Short Squeeze as Bitcoin Bet Defies Bears

A brewing financial drama is capturing global attention as Metaplanet Inc., Asia’s leading Bitcoin treasury company, has become Japan’s most shorted stock.

Data shared on X by company CEO Simon Gerovich shows more than 25% of Metaplanet’s shares have been borrowed for short positions, setting the stage for what some crypto community members feel could be a potential GameStop-style short squeeze, but this time powered by Bitcoin.

BTC Strategy Powers Record Growth

Metaplanet’s speedy rise from a hospitality company into Japan’s biggest corporate BTC holder has made it both a darling of the Bitcoin maximalist crowd and a target of institutional skepticism.

On May 18, the firm reported a record ¥877 million ($6M) in Q1 revenue, with a whopping 88% attributed to its Bitcoin strategy.

It has also increased its holdings of the crypto asset by almost four times since January, with its latest buy of 1,004 BTC for over $104 million bringing its entire stash to 7,800 BTC valued at more than $800 million. That same day, Michael Saylor’s Strategy also announced a 7,390 BTC purchase, pushing its holdings to 576,230 BTC.

Still, instead of boosting investor confidence across the board, the Tokyo-listed company’s crypto pivot prompted an intense wave of short interest. Japanese bond yields, like the 30-year JGB spiking to 3.14% on May 20, seem to have sparked bearish bets on risk-on assets, including crypto-heavy stocks like Metaplanet’s.

Over the past seven days, the firm’s shares dipped 12.84%, suggesting early success for short sellers. However, they seem to have underestimated retail and institutional momentum, and the trend may be quickly reversing.

Short Squeeze Risk Escalates

In two consecutive days, Metaplanet’s share price rocketed to its daily limit-up and was halted on both days, closing at ¥933 on May 21. The halts, triggered by Tokyo Stock Exchange circuit breakers, have prevented short sellers from exiting their positions, potentially setting up a slow-motion squeeze.

Bitcoiners are now rallying behind Metaplanet, likening it to the 2021 GameStop frenzy, but with one crucial difference: Metaplanet is backed by Bitcoin, not meme stock hype.

“Metaplanet MTPLF will be the GME of 2021,” tweeted analyst Chicken Genius. “Except this time, backed by the hardest monetary hedge in the world. Bitcoin.”

On May 20, CEO Gerovich shared that his firm’s OTC listing had seen an uptick in ranking, jumping to third by dollar volume and fourth by trade counts across more than 12,000 companies.

What makes the current play even more potent is Metaplanet’s strategy. As a community member, Macrocomics noted, the business leverages a put-selling strategy on Bitcoin futures to either acquire BTC at a discount or generate income for more purchases, thereby improving its Bitcoin yield without taking on debt.

So, while short sellers may view the organization as overextended, its fundamentals and market sentiment tell a different story.

“Imagine being short Metaplanet on the TSE and being unable to close your short positions the past 2 days because of limit up halts,” warned an X user.

With the firm’s stock locked in limit-up territory, traders are bracing for another spike when trading resumes. And if retail investors join the rally, as they did with GameStop, the squeeze could intensify, forcing short sellers to cover at even higher prices.