Short-Seller Jim Chanos Shorts Strategy, Buys Bitcoin, Sees 1500% Stock Surge

Prominent short-seller Jim Chanos, known for his critical stance on Bitcoin and cryptocurrencies, has recently adopted a new trading strategy. This strategy involves shorting shares of Strategy, a company formerly known as MicroStrategy, while simultaneously buying Bitcoin. Chanos revealed this move at the Sohn Investment Conference in New York, describing it as a way to capitalize on a significant price mismatch. He sees this as buying something for $1 and selling something for $2.50, highlighting what he perceives as a substantial discrepancy in valuation.

Chanos argues that Strategy is essentially selling the idea of buying Bitcoin within a corporate structure, and other companies are following this approach in hopes of receiving a similar market premium. However, Chanos dismisses this strategy as "ridiculous," viewing it as a good indicator of both arbitrage opportunities and retail speculation. His trade reflects a belief that purchasing Bitcoin directly is more advantageous than buying shares of companies that hold Bitcoin, as the latter can lead to inflated stock valuations due to excessive speculation and mispricing of risk.

Chanos' move assumes that investors overpay for Bitcoin exposure through corporate wrappers like Strategy. He believes that holding Bitcoin through companies reflects excessive speculation and mispricing of risk, and that retail investors' idea of having Bitcoin indirectly through corporate wrappers can inflate the company’s stock valuations. Despite the potential risks, Chanos' strategy suggests that direct investment in Bitcoin is more efficient than indirect exposure through corporate holdings.

While shorting Strategy might seem like a prudent move, investors have already incurred significant losses by betting against the firm. In 2024, those who shorted Strategy lost approximately $3.3 billion as the company’s stock began to rise. As of May 2025, Strategy holds around 568,840 Bitcoin, valued at approximately $59 billion. Since the company started accumulating Bitcoin in 2020, its stock price has surged by 1,500%, outperforming the S&P 500’s gains during the same period. An analyst from Strategy, Jeff Walton, has predicted that the company’s Bitcoin holdings could make it the "number one publicly traded equity in the entire market" in the future.

Chanos' stance on Bitcoin has evolved over time. In a 2018 interview, he described Bitcoin as a "libertarian fantasy," expressing skepticism about its viability as a store of value. He argued that in the worst-case scenario, digital currency would not be a reliable store of value, and that food would be a better investment. Chanos has also criticized Bitcoin for enabling illicit activities, referring to the crypto sector as "the dark side of finance" and accusing it of facilitating tax evasion and money laundering. Despite these critiques, Chanos now appears to see value in holding Bitcoin directly, particularly in contrast to investing in public companies with large BTC treasuries.

Chanos is renowned for his short position against the energy company Enron before its bankruptcy in 2001, which generated substantial profits for Kynikos Associates, the firm he founded. A short position involves borrowing assets from a broker, selling them at the current price, and then repurchasing them once the value falls to return what is owed to the broker. Short sellers profit when the asset’s value declines but face losses when the asset appreciates. While Chanos profited from short-selling Enron, his predictions are not always accurate. He has been bearish on Tesla and announced a short position in 2016, but Tesla's stock skyrocketed by 2,200% between 2015 and 2021, causing major losses to Chanos’ fund. In 2020, the fund ended with $405 million in assets under management, down from over $900 million the previous year. The fund was subsequently converted into a family office, and external assets were returned to investors.