Chanos declares victory in his bet vs. Strategy's Saylor

By Jules Rimmer

Famed short-seller's bet that premium to bitcoin would evaporate proved successful

James Chanos calls time on a very profitable trade.

If it were a boxing match, Jim Chanos would have won by a knockout.

Back in December, the renowned Wall Street short-seller recommended a controversial pair trade idea to investors: short the then-booming stock of MicroStrategy (MSTR), now just called Strategy, and go long its one underlying investment, bitcoin (BTCUSD). The trade was to profit from what he believed was the inevitable contraction of the premium the company commanded over its holding in the cryptocurrency.

At the time, Michael Saylor's flagship bitcoin vehicle was soaring at 2.5 times the market value of its bitcoin holdings. After a major correction in the shares compared to a much smaller decline in bitcoin, that market capitalization to net asset value multiple has shrunk to around 1.23 times.

Chanos first recommended shorting the mNAV of MicroStrategy in Dec 2024 at 2.5 times. Last week, it slumped to 1.23 times.

In a posting on X, Chanos said that he had unwound his trade last week and banked his profits. Depending on timing and entry/exit points Chanos could have made as much as 50% on the wager.

"While we believe there is more room for mNAV compression, the thesis has largely played out," he said. He said let other people chase the "last leg of the trade" as the mNAV falls to 1.

Chanos first came to prominence shorting Enron before it went bankrupt and at one point in 2008 his hedge fund, known for its shorting strategies, ran about $6 billion under management. In 2023 Chanos closed his hedge funds.

Back in the summer when the dispute became public, Saylor, the most prominent evangelist for the cryptocurrency, had accused Chanos of not understanding the business model while the latter retaliated, accusing Saylor of "financial gibberish."

However, as bitcoin has struggled to maintain its upward momentum and encountered an air pocket, dropping 20% in October, the premium that investors were prepared to pay for exposure to Strategy, the biggest holder of bitcoin and its most liquid vehicle, plummeted.

The premium contraction may be owing to investors' reluctance to reward Saylor for his financial engineering as he sold debt and shares to fund purchases of the underlying. The surge in gold prices also distracted some investors from bitcoin while the advent of hundreds of copycat strategies from other firms, both holders of bitcoin as well as other cryptocurrencies like Ethereum, has diluted the appeal of Saylor's enterprise.

-Jules Rimmer

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11-10-25 0723ET