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Veteran short seller Jim Chanos on Thursday revealed a strategic arbitrage trade: long Bitcoin (CRYPTO: BTC), short Strategy (NASDAQ:MSTR).
His position targets what he described as a widening and unjustified premium on MicroStrategy’s stock relative to its Bitcoin holdings.
“We’re buying Bitcoin, selling MicroStrategy stock—an arbitrage play, buying for $1, selling for $2.50,” Chanos said during the talk.
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He emphasized that the core trade isn’t based on predicting Bitcoin’s price direction but exploiting the spread between MicroStrategy’s net asset value (NAV) and its trading price.
“I don’t know where Bitcoin is going.. $100,000, a million, $10,000. I don’t know. I don’t think anybody else knows,” he said. “But what I do know is it’s generally profitable to short $1 for $2.50 or three dollars.”
Chanos, who has intermittently held this position over the past few years, criticized what he sees as a flawed narrative among retail investors: buying into corporate structures like MicroStrategy as a proxy for direct Bitcoin exposure.
“They are basically selling retail investors the idea that we are going to buy Bitcoin in a corporate structure… and therefore earnings are created by the difference between what new investors are paying with the net asset value is,” he said.
He likened his own approach to that of Strategy founder Michael Saylor saying, “We’re doing exactly what MicroStrategy and Michael Saylor are doing,” highlighting that his trade simply reverses the structure: directly buying Bitcoin while selling the stock.
Chanos also pointed to the premium to NAV as a barometer of market speculation, noting it has recently returned to levels seen at the end of 2024.
“It’s a good barometer, not only just of the arbitrage itself, but I think of retail speculation,” he added.
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