Chanos Unwinds Strategy Short and Bitcoin Long Position
James Chanos closed his short position against Strategy on Friday, November 7, 2025. According to Cointelegraph, Kynikos Associates founder unwound both his short on Strategy and long position on Bitcoin at the start of trading. The move comes after Strategy shares fell 50% from their 2025 peak.
Chanos stated that Strategy's market Net Asset Value compressed to 1.23x from approximately 2.0x in July 2025. The firm deemed it prudent to cover the trade with mNAV below 1.25x. Strategy holds 641,205 BTC on its balance sheet. The company's implied premium dropped from $70 billion in July to $15 billion currently.
Pierre Rochard, CEO of The Bitcoin Bond Company, responded that the Bitcoin treasury company bear market is gradually ending. The short seller's exit represents a potential turning point for the sector. Strategy traded at $241 per share when Chanos announced his position closure.
Treasury Companies Face Valuation Pressure
The closure matters because it reflects a broader reset in Bitcoin treasury company valuations. Previously, it was reported that 25% of public Bitcoin treasury firms now trade below their BTC holdings value. Strategy's premium fell to 1.26, the lowest level since March 2024. Lower premiums reduce the company's capacity to purchase additional Bitcoin through share issuances.
CoinDesk reports that other treasury firms suffered steeper corrections. Metaplanet shares dropped 56% since June 21, 2025. KindlyMD and other companies declined more than 80% from their peaks. Strategy remained the only major player maintaining a premium throughout the downturn.
The compression forced companies to slow their Bitcoin accumulation strategies. Average daily purchases by treasury firms fell to the lowest level since May 2025. Some companies even sold Bitcoin holdings to meet debt obligations. The sector faces pressure to prove sustainability beyond momentum-driven share premiums.
Treasury Model Faces Structural Questions
The Strategy position closure raises questions about the long-term viability of Bitcoin treasury strategies. OMFIF describes the model as creating feedback loops where corporate purchases drive stock prices above asset values. Companies issue shares at premiums to buy more Bitcoin, which theoretically continues the cycle.
However, this mechanism only functions when market caps trade above Bitcoin holdings. The recent premium collapse suggests investor appetite for leveraged Bitcoin exposure through corporate vehicles has diminished. Competition from Bitcoin ETFs and dozens of new treasury companies eroded Strategy's first-mover advantage.
Critics argue the treasury model represents speculative excess rather than sound corporate strategy. Stanford finance professor Darrell Duffie told Fortune that companies should invest capital in core competencies instead of competing with hedge funds. The model's success depends on continuous Bitcoin price appreciation and sustained market premiums.
Supporters counter that treasury companies provide legitimate leveraged exposure to Bitcoin. They can raise debt at rates lower than Bitcoin's expected returns. Strategy delivered a 75% BTC yield for shareholders in 2024 by increasing Bitcoin per share. The company accumulated more BTC per outstanding share without Bitcoin price increases.
Bitcoin rebounded 2% to $106,430 after reports emerged that the Senate reached an agreement to end the government shutdown. The cryptocurrency sits roughly 14% higher year-to-date despite recent volatility. Whether treasury companies recover depends on Bitcoin maintaining upward momentum and companies demonstrating operational value beyond passive holdings.