How Jim Chanos Outmaneuvered Michael Saylor: Short MSTR, Long BTC

How Jim Chanos Outplayed Michael Saylor: An Inside Look at the Short MSTR, Long BTC Strategy

Jim Chanos, the renowned 'cynical' investor, is known for closing his highly publicized and controversial short position against Michael Saylor's MicroStrategy (MSTR). He reportedly generated approximately a 100% return on the trade. More precisely, Chanos established a paired trade: shorting MSTR while simultaneously going long on Bitcoin (BTC). Chanos's bet wasn't on an absolute decline in MSTR's USD-denominated share price, but rather on the contraction of the premium at which MSTR traded relative to Bitcoin. MicroStrategy is one of the largest Digital Asset Treasury (DAT) companies, publicly listed entities that leverage financial leverage to acquire crypto assets, rather than relying on traditional product or service sales for revenue. MicroStrategy currently holds approximately $6.6 billion USD worth of Bitcoin (BTC) and has an enterprise value of approximately $8.4 billion USD (market capitalization plus pro forma net debt including preferred stock), equivalent to a 1.27x premium to its net asset value (mNAV). However, since Chanos established his position, this mNAV multiple has significantly declined. He established this two-legged trade in November 2024, expressing skepticism about MSTR's performance relative to Bitcoin. By last Friday morning, Chanos and his firm Chanos & Co. had fully unwound the position, realizing a roughly 100% paper profit. Chanos's social media 'victory lap' sparked considerable discussion, with related posts garnering over one million views. A significant portion of Chanos’s profit stemmed from the decline in MSTR’s net asset value multiple (mNAV). In November 2024, that multiple was above 3x; by December of the same year, when Chanos articulated his investment rationale at his annual conference, the average had fallen to around 2.5x. By the time he fully unwound the position, MSTR's mNAV had fallen to 1.23x – meaning that the company's stock price represented only a 23% premium to its Bitcoin holdings. Concurrently, the other leg of his trade was appreciating. Since November 2024, Bitcoin's price has increased by approximately 25%. In other words, Chanos not only doubled his money shorting MSTR but also earned an additional ~25% return from Bitcoin's appreciation. Profiting on both sides cements this family office fund manager's position as 'Saylor’s most successful critic.'

Mimicking MicroStrategy, Surpassing MicroStrategy

Chanos faced intense criticism from Saylor supporters, including community members self-identifying as “Irresponsibly Long MSTR,” after publicly expressing his bearish view on MicroStrategy at the 2025 Sohn Investment Conference in New York. In multiple television interviews and social media appearances, Chanos emphasized that his rationale for shorting stemmed from the difficulty of MicroStrategy sustaining its high net asset value multiple (mNAV) over the long term. He described his trading strategy as: “Selling MicroStrategy shares, buying Bitcoin – basically buying something for $1 and selling it for $2.50.” He also directly criticized Saylor's approach of buying Bitcoin with leverage, calling it “utterly absurd” and “pure financial mumbo jumbo.” In fact, Chanos believes his trading logic is essentially mimicking Saylor himself: selling MSTR and using the proceeds to buy Bitcoin. Chanos repeatedly pointed out that MicroStrategy’s continuous dilution of its equity and selling of MSTR in order to buy more BTC – was the key impetus for him establishing this two-legged trade (short MSTR, long BTC). While MicroStrategy has also raised billions of dollars through issuing preferred shares (which temporarily won't directly dilute MSTR equity), the bulk of its funding has still come from selling MSTR shares.