The challenging period for Bitcoin reserve stocks may be drawing to a close. In a significant market development, legendary Wall Street short-seller Jim Chanos, renowned for his successful bet against Enron, has announced that his investment firm has officially unwound its nearly year-long short position on MicroStrategy (NASDAQ: MSTR).
This news comes after a tumultuous period for companies heavily invested in Bitcoin. In recent weeks, shares of Bitcoin reserve companies, including MSTR, have suffered substantial declines, with many plummeting sharply from their year-to-date highs. This downturn had prompted some analysts to advocate for aggressive short-selling, warning that the valuations of such companies were in a “bubble destined to burst.”
However, as bearish sentiment reached a fever pitch, a notable shift in market dynamics appears to be underway.
Chanos’ Strategic Exit: Valuation Metrics Point to Prudence
On November 8, Jim Chanos took to X (formerly Twitter) to confirm his firm’s strategic exit, stating that the “short MSTR, long Bitcoin” hedged trade was closed at the market open last Friday. Chanos highlighted several key factors underpinning this decision:
- Significant Stock Decline: MSTR’s share price has depreciated by approximately 50% from its peak earlier this year.
- mNAV Compression: The company’s market cap to net asset value (mNAV) ratio has compressed dramatically, falling from roughly 2.0x in July 2025 to a more modest 1.23x.
- Implied Premium Reduction: The implied premium, calculated as the enterprise value minus the value of its held Bitcoin assets, has shrunk from an estimated $70 billion in July to $15 billion. This indicates a recalibration of the company’s valuation to a more reasonable level.
A memo from Chanos’s firm further elaborated: “Given that mNAV has fallen from approximately 2.0x in July 2025 to below 1.25x today, it is prudent to close this trade now.” Despite acknowledging that MSTR’s mNAV could face further compression due to ongoing common stock issuance, Chanos concluded that his “short thesis has largely played out.”
As we have gotten some inquiries, I can confirm that we have unwound our $MSTR/Bitcoin hedged trade as of yesterday’s open. pic.twitter.com/lgrWNy35H8
— James Chanos (@RealJimChanos) November 8, 2025
A Potential Turning Point for Bitcoin-Centric Investments
Chanos’ high-profile move to close his short position is being widely interpreted as a powerful signal that institutional short-sellers are retreating from Bitcoin reserve stocks. This could herald the end of the most challenging period for these companies, suggesting that the worst of the bear market may now be behind them.
Echoing this sentiment, Pierre Rochard, CEO of The Bitcoin Bond Company, commented, “The bear market for Bitcoin reserve companies is gradually coming to an end.” This perspective suggests growing confidence that the fundamental value of Bitcoin-holding entities is becoming more recognized, potentially paving the way for renewed investor interest.
Disclaimer: This article is intended solely for market information purposes. All content and views are provided for reference only and do not constitute investment advice. They do not necessarily reflect the views and positions of BlockBeats. Investors are encouraged to make their own informed decisions and conduct their own due diligence. The author and BlockBeats will not assume any responsibility for direct or indirect losses incurred from investor transactions.
