Short MSTR, long BTC, perfect arbitrage amid the DAT craze

Title: How Jim Chanos Outplayed Michael Saylor: Short MSTR, Long BTC

Author: Proto Staff

Translation: Peggy, BlockBeats

Editor’s Note: When Strategy turns “holding Bitcoin through a corporate vehicle” into a belief, Jim Chanos chooses to bet in the opposite direction: short MSTR, long BTC.

It may seem contradictory, but fundamentally they are the same: both are exploiting market structural deviations, with one leveraging faith and the other rationally dissecting bubbles. In this battle of valuation and liquidity, faith and skepticism are not clear-cut but reflect two different choices.

Below is the original article:

The renowned Wall Street cynic Jim Chanos has closed his widely watched and controversial short position against Michael Saylor’s Strategy—reportedly earning approximately 100% returns by shorting the company’s common stock, MSTR.

More precisely, this well-known short seller established a pair trade: short MSTR while going long Bitcoin (BTC).

He is not betting that MSTR’s stock price will absolutely decline in dollar terms, but that the premium of MSTR relative to BTC will narrow.

Strategy is one of the largest digital asset treasury companies (Digital Asset Treasury, DAT) globally. Such publicly listed companies acquire crypto assets through financial leverage rather than relying on traditional product or service sales for revenue. The company currently holds about $66 billion worth of Bitcoin (BTC), with an enterprise value of approximately $84 million (market cap plus net debt including preferred shares), trading at a 1.27x premium over its net asset value (mNAV).

However, since Chanos established his position, this mNAV has significantly declined.

He initiated this dual-leg trade in November 2024 to express skepticism that MSTR would outperform Bitcoin; as of last Friday morning, Chanos and his firm Chanos & Co. have fully closed the position, realizing a profit of about 100%.

Chanos shared this “victory tour” on social media, which has garnered over 1 million views.

Short MSTR, Long BTC

Chanos’s gains mainly stem from the decline in MSTR’s net asset multiple (mNAV).

In November 2024, this multiple was over 3x; by December of the same year, when he explained his investment logic at the annual conference, it had fallen to about 2.5x. When he fully closed the position, MSTR’s mNAV had dropped to 1.23x—meaning the stock was only trading at a 23% premium over its Bitcoin holdings.

Meanwhile, another part of his trade was also rising. Since November 2024, Bitcoin’s price has increased by approximately 25%. In other words, Chanos not only doubled his funds through shorting MSTR but also earned about 25% from Bitcoin’s rise.

Both sides profited simultaneously, cementing his position as “Saylor’s most successful critic.”

Imitate Strategy, Surpass Strategy

Chanos publicly voiced a short thesis against Strategy at the 2025 New York Sohn Investment Conference, immediately facing fierce criticism from Saylor supporters, including community members self-identifying as “Irresponsibly Long MSTR.”

In multiple TV interviews and social media appearances, Chanos emphasized that his reason for being bearish is that Strategy cannot sustain its high mNAV over the long term.

He described his trading strategy as: “Sell MicroStrategy stock, buy Bitcoin—basically buy something at $1 and sell at $2.50.” He also bluntly criticized Saylor’s leveraged Bitcoin purchases as “absurd” and “pure financial nonsense.”

In fact, Chanos believes his trading logic essentially mimics Saylor himself: selling MSTR to buy Bitcoin with the proceeds.

Chanos has repeatedly pointed out that Strategy’s continuous dilution of its equity and ongoing sale of MSTR to buy more BTC—key motivations behind his pair trade (short MSTR, long BTC).

Although Strategy has also raised billions of dollars through issuing preferred shares (temporarily avoiding direct dilution of MSTR’s equity), most of its funding still comes from selling MSTR stock.