Chanos Arbitrages MSTR vs BTC for 100% Profit
Jim Chanos recently closed a paired trade that shorted MSTR stock while going long on BTC. He targeted MicroStrategy’s inflated net asset value ratio. When he opened the position in November 2024, MSTR traded at over 3× its mNAV. The premium later shrank to 1.23×, delivering a near-100% gain on the short leg. Simultaneously, BTC rose by about 25%, boosting total profits. Chanos criticized Michael Saylor’s leveraged BTC purchases and equity dilution. This arbitrage highlights structural risks in digital asset treasury (DAT) firms and could prompt traders to favor direct crypto exposure over DAT stocks.
Bullish
Chanos’s successful arbitrage underscores Bitcoin’s resilience and the vulnerability of DAT stocks like MSTR. The 100% profit on the short leg and 25% BTC rally may drive traders to reallocate capital from structured DAT vehicles into spot BTC positions. In the short term, we expect increased selling pressure on MSTR shares and similar high mNAV stocks, while BTC demand strengthens. Historically, profit-taking on premium DAT equities has coincided with renewed direct crypto inflows, as seen in Q4 2022 when Grayscale’s discount contraction led to Bitcoin outperformance. In the long term, awareness of mNAV risk could sustain cautious sentiment around leveraged crypto treasuries, but bolster the case for unencumbered BTC holdings. Overall, this news is bullish for Bitcoin markets, yet bearish for DAT equity valuations.