Source: Cointelegraph
Original: “Jim Chanos Takes a Short Position on Bitcoin (BTC) and Strategy”
Famous short seller Jim Chanos, who has been a vocal critic of Bitcoin and cryptocurrencies, has revealed a new trading strategy: shorting Strategy (formerly MicroStrategy) stock while buying Bitcoin.
At the Sohn Investment Conference in New York, Chanos told CNBC that he is "selling MicroStrategy stock and buying Bitcoin." He described this move as buying something for $1 while selling another for $2.50, referring to the significant price mismatch he has observed.
Chanos pointed out that Strategy is promoting the idea of purchasing Bitcoin (BTC) through its corporate structure, and other companies are following suit, hoping to achieve 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 for measuring retail investor speculation."
Chanos's recent investment actions are based on the assumption that investors are overpaying for Bitcoin exposure through companies like Strategy. This seasoned investor's actions reflect a clear stance that directly purchasing Bitcoin would be wiser than indirectly accessing Bitcoin through Strategy stock.
Chanos's operations indicate that holding Bitcoin through a company reflects a market overly speculative mindset and mispricing of risk. He believes that retail investors indirectly holding Bitcoin through corporate packaging may artificially inflate these companies' stock valuations.
While shorting Strategy seems reasonable, investors have suffered billions in losses from shorting the company. In 2024, those betting on the company's stock price decline faced approximately $3.3 billion in losses as the stock price rose.
As of May 2025, Strategy holds about 568,840 Bitcoins, valued at approximately $59 billion. Since the company began accumulating Bitcoin assets in 2020, its stock price has soared by 1,500%, significantly 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 capitalization in the entire market" in the future.
Chanos has not always held a friendly attitude towards Bitcoin. In a 2018 interview, he described Bitcoin as a "libertarian fantasy."
At that time, Chanos stated that using digital currency as a store of value in the worst-case scenario of an economic crisis was unrealistic. The investor bluntly said that if fiat currency led to a collapse of the world, the last thing he would want to hold is Bitcoin. He emphasized, "Food is the best choice."
He also harshly criticized Bitcoin for facilitating illegal activities, calling the crypto industry "the dark side of finance" in a 2023 interview, accusing the industry of promoting tax evasion and money laundering.
Chanos has 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 of 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 on 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 at a lower value to return to the broker. Short-sellers profit when the asset's value declines but face potential losses when the asset price rises.
While this investor reaped significant rewards from shorting Enron, Chanos's market predictions have not always been accurate. He held a strong bearish view on Tesla and publicly announced a short position in 2016. However, Tesla's stock skyrocketed by an astonishing 2,200% from 2015 to 2021.
This event severely impacted Chanos's fund. In 2020, the fund's assets under management plummeted from over $900 million the previous year to $405 million. Subsequently, the fund was transformed into a family office, returning all external investors' assets.
Related: Reports indicate that Ukraine's Bitcoin (BTC) strategic reserve bill has entered the final review stage.
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