- Famed short seller Jim Chanos closed his 11-month short position on MicroStrategy (MSTR), signaling a potential bottom in the Bitcoin treasury stock market.
- MSTR’s valuation premium to its bitcoin holdings has fallen from 2.5 to 1.23, reducing the arbitrage opportunity.
- MicroStrategy, holding over 641,000 bitcoins valued at about $68 billion, remains the largest public bitcoin treasury holder.
- The bitcoin treasury sector has experienced significant declines, with major players dropping over 80% from peaks.
Jim Chanos, known for predicting Enron’s collapse, announced he has closed his short position on MicroStrategy (MSTR) after holding the trade for 11 months. The position was a short on MSTR shares combined with a long on bitcoin. A short position entails selling borrowed shares with the expectation that the stock price will decline, and closing it suggests limited further downside, as noted by Jim Chanos.
Chanos initially targeted MSTR when its enterprise value significantly exceeded the value of its bitcoin assets. At the start, MSTR’s multiple net asset value (mNAV)—a ratio comparing company value to bitcoin holdings—was about 2.5, indicating a steep premium over its bitcoin base. Over time, the mNAV compressed to 1.23, prompting Chanos and his team to close the trade after MSTR shares dropped nearly 50% from their 2025 peak.
The mNAV reflects how much more a company’s stock is worth relative to the market value of its bitcoin holdings. The current compression suggests MSTR’s price has aligned more closely with its bitcoin-adjusted value, although some further narrowing toward parity (mNAV near 1.0) may occur.
MicroStrategy, headquartered in Tysons Corner, Virginia, holds approximately 641,205 bitcoins worth around $68 billion at current prices. It remains unique among bitcoin treasury companies for maintaining a premium valuation, unlike others that have traded at discounts this cycle.
The unwind of the short MSTR/long bitcoin trade coincides with a volatile year for bitcoin treasury stocks, where leading firms such as Metaplanet (3350) and KindlyMD (NAKA) have seen declines exceeding 80% from their all-time highs. On the last trading day, MSTR hit a 2025 low, falling 20% despite bitcoin rising above $105,000—extending bitcoin’s year-to-date gains to about 14%. Following this announcement, MSTR shares rose 3% in pre-market trading to $248 per share.
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