The Mirror Game of Faith and Doubt: How Jim Chanos Defeated Saylor's Leveraged Belief by "Shorting MSTR and Going Long on Bitcoin"

Original Title: Shorting MSTR, Go Long BTC, Perfect Arbitrage in the DAT Frenzy

Original Author: Proto Staff

Source:

Reprint: Daisy, Mars Finance

It seems to be a divergence, yet fundamentally the same: both sides are leveraging the structural biases of the market, one using faith to amplify with leverage, the other rationally dissecting the bubble. In this contest of valuation and liquidity, belief and doubt are not clearly defined, but rather two choices that reflect each other.

The following is the original text:

The famous “cynical” investor Jim Chanos from Wall Street has closed his highly watched and controversial shorting trade against the Strategy under Michael Saylor – it is estimated that he made about 100% profit by shorting the company's common stock MSTR.

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

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

Strategy is one of the largest digital asset treasury companies in the world (Digital Asset Treasury, referred to as DAT). These listed companies acquire crypto assets through financial leverage rather than relying on traditional product or service sales to generate revenue. The company currently holds approximately 66 billion USD in Bitcoin (BTC), with an enterprise value of around 84 million USD (market capitalization plus net debt including preferred stock), which is a 1.27 times premium over its net asset value (mNAV).

However, since Chanos established the position, this mNAV has experienced a significant decline.

He established this legged trade in November 2024 to express doubts about MSTR's performance compared to BTC; as of last Friday morning, Chanos and his firm Chanos & Co. had fully closed their positions, with a reported profit of about 100%.

Chanos's recent “victory tour” shared on social media has sparked heated discussions, with the related post's views exceeding 1 million.

shorting MSTR, go long BTC

Chanos's earnings primarily come from the decline in MSTR's net asset multiple (mNAV).

In November 2024, this multiple once exceeded 3 times; by December of the same year, when he elaborated on the investment logic at the annual meeting, the average level had dropped to about 2.5 times. When he completely closed his position, MSTR's mNAV had fallen to 1.23 times - meaning the company's stock price was only a 23% premium over its held Bitcoin assets.

At the same time, another part of his trading is also on the rise. Since November 2024, the price of Bitcoin has increased by about 25%. In other words, Chanos not only doubled his funds by shorting MSTR but also earned about 25% in profits due to the rise in Bitcoin.

Both sides profited, allowing this family office fund manager to firmly hold the position of “Saylor's most successful critic.”

Imitate Strategy, Surpass Strategy

Chanos faced fierce criticism from Saylor supporters for publicly expressing a bearish view on Strategy at the 2025 New York Sohn Investment Conference, including members of the community who call themselves “Irresponsibly Long MSTR.”

In multiple television interviews and social media appearances, Chanos has emphasized that his reason for shorting is the difficulty for the Strategy to maintain a high net asset multiple (mNAV) over the long term.

He once described his trading strategy as: “Sell MicroStrategy's stock, buy Bitcoin—basically buying something for 1 dollar and selling it for 2.5 dollars.” He also bluntly criticized Saylor's leveraged buying of Bitcoin as “ridiculously absurd” and “pure financial nonsense.”

In fact, Chanos believes that his trading logic essentially mimics Saylor himself: selling MSTR and using the profits to buy BTC.

Chanos has repeatedly pointed out that Strategy's continuous dilution of its own equity and ongoing sales of MSTR to purchase more BTC is precisely the key incentive for him to establish this legged trade (shorting MSTR, going long BTC).

Although Strategy has also raised billions of dollars through the issuance of preferred shares (which will not directly dilute MSTR equity for the time being), most of its funding still comes from selling MSTR stock.