The question of whether Bitcoin is being shorted by Wall Street funds involves understanding the dynamics between institutional investors, market sentiment, and the mechanisms used to gain exposure to Bitcoin. Shorting means betting that the price of an asset will fall, and it is a common strategy in traditional finance. However, Bitcoin’s unique market structure and the growing involvement of institutional players make this a complex topic.
Some well-known investors, like legendary short-seller Jim Chanos, have historically taken short positions on Bitcoin-related assets. For example, Chanos had a short position on MicroStrategy (now called Strategy Inc.), a company that holds a large amount of Bitcoin on its balance sheet. He closed his short position on MicroStrategy shares and his long Bitcoin position in early November 2025, indicating a shift in his view on the asset or the company’s valuation. MicroStrategy’s market valuation relative to its Bitcoin holdings (measured by mNAV, or market net asset value) has compressed significantly from 2.5 times in December 2024 to about 1.23 times in November 2025, and it is expected to approach 1.0x, meaning the stock price would reflect the exact value of its Bitcoin holdings. This compression suggests that the market is valuing the company closer to its Bitcoin assets rather than at a premium, which could influence short-selling strategies[1].
MicroStrategy has also issued preferred stock to acquire more Bitcoin, which requires paying dividends and adds complexity to its capital structure. This financial engineering can affect how investors, including hedge funds and institutional players, approach shorting or going long on Bitcoin exposure through such companies[1].
On the broader market level, Bitcoin’s price has shown resilience around key support levels, such as $95,000 in late 2025. Despite some selling pressure and the return of about 4.65 million dormant Bitcoins to the market in 2025, institutional demand remains a stabilizing factor. Many institutional investors view these price levels as strategic accumulation points rather than signals to exit. This “smart money” buying helps defend Bitcoin’s price against sharp declines and reduces the effectiveness of short-selling pressure[2].
Additionally, the growth of regulated investment vehicles like spot Bitcoin ETFs has created more transparent and compliant channels for institutional inflows. These ETFs and other regulated funds tend to buy during price dips, providing structural support to Bitcoin’s price. Regulatory clarity in major markets such as the U.S., Europe, and Asia has increased institutional confidence, making it less likely that large-scale shorting by Wall Street funds would dominate the market without significant counterbalancing demand[2].
Another important factor is the rise of Digital Asset Trusts (DATs) and publicly traded companies holding Bitcoin as treasury reserves. These entities allow institutional investors to gain indirect exposure to Bitcoin through traditional financial instruments like bonds or preferred shares, which can be more palatable for funds with strict mandates. For example, Strategy Inc. (formerly MicroStrategy) holds over 640,000 Bitcoins, about 3% of the total supply, making it one of the largest public holders. The presence of such large holders and the capital they bring into the market adds liquidity and stability, which can dampen the impact of short-selling[3].
In summary, while some Wall Street funds and investors have engaged in shorting Bitcoin or Bitcoin-related assets, the overall market environment in 2025 shows strong institutional accumulation, growing regulatory clarity, and innovative financial structures that provide both exposure and support to Bitcoin. These factors collectively reduce the likelihood that Bitcoin is being heavily shorted by Wall Street funds in a way that would cause sustained downward pressure on its price. Instead, the market appears to be balancing between cautious profit-taking, strategic accumulation, and structural support mechanisms that maintain Bitcoin’s price resilience.