Source: Cointelegraph
Original: (Jim Chanos takes a short bet against Bitcoin (BTC) and Strategy)
Notorious short seller Jim Chanos has been a vocal critic of Bitcoin and cryptocurrencies, now revealing a new trading strategy of shorting Strategy (formerly MicroStrategy) stock and buying Bitcoin.
At the Sohn Investment Conference held in New York, Chanos told CNBC that he is "selling MicroStrategy stock and buying Bitcoin." The investor described this move as buying something for $1 while selling another for $2.50, referring to the significant price mismatch he observed.
Jim Chanos pointed out that Strategy is promoting the idea of buying Bitcoin (BTC) through company structures, and other companies are following suit, hoping to gain similar market premiums.
Chanos called this phenomenon "extremely absurd." He described his trading strategy as "not only an important indicator of arbitrage itself but also a barometer of retail investor speculation."
Chanos's recent investment moves are based on the assumption that investors have overpaid for Bitcoin exposure through companies like Strategy. The seasoned investor's actions reflect a clear stance that directly buying Bitcoin would be wiser than gaining indirect exposure through Strategy stock.
Chanos's actions indicate that holding Bitcoin through companies reflects an overly speculative market mindset and mispricing of risk. He believes that retail investors indirectly holding Bitcoin through company packaging may artificially inflate these companies' stock valuations.
Despite the seeming rationale behind shorting Strategy, investors have suffered billions in losses from shorting the company. In 2024, those betting on the company's stock price to fall faced losses of about $3.3 billion as the stock price rose.
As of May 2025, Strategy holds approximately 568,840 Bitcoins, valued at about $59 billion. Since the company began accumulating Bitcoin assets in 2020, its stock price has skyrocketed by 1,500%, outperforming the S&P 500 index during the same period.
In a recent documentary released by the Financial Times, Strategy analyst Jeff Walton stated that the company's Bitcoin holdings would help it become "the publicly traded stock with the highest market value in the entire market" in the future.
Chanos has not always had a friendly attitude towards Bitcoin. In a 2018 interview, he described Bitcoin as a "libertarian fantasy."
Chanos stated at the time that using digital currency as a store of value in the worst-case economic crisis is unrealistic. The investor bluntly said that if fiat currency leads to the collapse of the world, the last thing he would want to hold is Bitcoin. He emphasized, "Food is the best option."
He also severely criticized Bitcoin for fueling illegal activities, stating in a 2023 interview that the crypto industry is the "dark side of finance" and accused the industry of facilitating tax evasion and money laundering.
Chanos also expressed deep skepticism about spot Bitcoin exchange-traded funds (ETFs), believing that Wall Street needs to maintain public interest in cryptocurrencies to profit from fees.
Despite these public criticisms, Chanos now seems to see the investment value in directly holding Bitcoin, especially compared to investing in publicly traded companies that hold large BTC reserves.
Chanos is best known in the market for his successful short position against energy giant Enron before it filed for bankruptcy in 2001. This investment decision brought substantial profits to his firm, Kynikos Associates.
A short-selling strategy involves borrowing assets from a broker, selling them at the current market price, and then repurchasing the assets after their value has declined to return them to the broker. Short-sellers profit when the asset's value declines but face potential losses when the asset's price rises.
While this investor reaped substantial returns from shorting Enron, Chanos's market predictions have not always been accurate. He held a strongly bearish view on Tesla and publicly announced a short position in 2016. However, Tesla's stock soared an astonishing 2,200% from 2015 to 2021.
The event severely impacted Chanos's fund. In 2020, the fund's managed assets plummeted from over $900 million the previous year to $405 million. Subsequently, the fund was transformed into a family office and returned all assets of external investors.
Related news: Reportedly, Ukraine's Bitcoin (BTC) strategic reserve bill has entered the final review stage.
