Prominent short-seller James Chanos has closed his short position against Strategy (formerly MicroStrategy), citing the significant narrowing of the premium on the company's Bitcoin holdings. Chanos initiated the short in May 2025 while simultaneously going long Bitcoin, betting that the premium between Strategy's stock price and its underlying Bitcoin value would compress. The premium has since fallen from a peak of 2.5x earlier in 2025 to 1.23x.
Premium Collapse: from $80 Billion to $15 Billion
According to Chanos, the dollar value of the premium shrank from roughly $80 billion to about $15 billion. Strategy holds over 641,000 BTC, currently valued at approximately $63,405 per Bitcoin, putting its crypto stash at around $40.6 billion. At the peak, the company's market capitalization exceeded $48.6 billion, well above its Bitcoin holdings.
Shares Nearly Halved
Strategy's stock has declined approximately 50% from its 2025 high, while Bitcoin's spot price has remained relatively stable. Chanos, best known for exposing the Enron scandal, argued that the premium represented an irrational valuation for a stock that essentially tracks Bitcoin. The trade was designed to profit from the convergence of Strategy's stock price toward the value of its Bitcoin assets.
The Hedged Strategy
By pairing a short on Strategy with a long on Bitcoin, Chanos created a market-neutral position that benefits from premium compression regardless of Bitcoin's outright direction. The closure signals that Chanos believes the premium has now reached a fair level, reducing the opportunity for further gains from the trade.
Market Implications
Chanos's exit may encourage other hedge funds to reassess their positions. With the rise of Bitcoin spot ETFs offering direct exposure, the appeal of Strategy as a proxy has diminished. The narrowing premium suggests the market is increasingly pricing Bitcoin-related equities based on underlying net asset value rather than speculative multipliers. Analysts will watch for further premium compression or potential discount scenarios.