The prolonged bear market for Bitcoin treasury companies may be nearing its end. Veteran investor and short seller James Chanos revealed that his firm, Kynikos Associates, has closed its short position against MicroStrategy (MSTR) — the largest corporate holder of Bitcoin.
Chanos announced the move on Sunday, explaining that his firm also unwound its long position on Bitcoin (BTC) at the start of trading on Friday. His decision marks a potential turning point for Bitcoin treasury stocks, which have seen significant losses in recent months.
“The Bitcoin treasury company bear market is gradually coming to an end,” said Pierre Rochard, CEO of The Bitcoin Bond Company, in response to Chanos’s statement.
Chanos Closes Short Position as MSTR Valuation Normalizes
Chanos noted that MicroStrategy’s shares are down about 50% from their 2025 highs and that the company’s market Net Asset Value (mNAV) has compressed to 1.23x, down from nearly 2.0x in July 2025.
“It is prudent to cover this trade with mNAV below 1.25x, having dropped from ~2.0x as recently as July 2025,” Chanos wrote in a note to investors.
He added that MicroStrategy’s implied premium — calculated as the company’s enterprise value minus the value of its 641,205 BTC holdings — has fallen sharply from $70 billion in July to $15 billion as of November. This adjustment suggests that MicroStrategy may now be more fairly valued after months of correction.
While Chanos acknowledged that MicroStrategy could still experience additional mNAV compression, especially if it issues more equity, he believes the bearish thesis on the stock has largely “played out.”
“This is the kind of signal you want to see for a reversal,” commented Rochard, suggesting that investor sentiment could soon shift in favor of Bitcoin treasury firms.
Bitcoin-Holding Firms See Sharp Market Cap Declines
MicroStrategy has been one of the hardest-hit Bitcoin treasury companies in 2025. Its market capitalization has fallen over 43%, dropping from $122.1 billion in July to $69.5 billion as of early November.
Similarly, Metaplanet, one of the top-performing Bitcoin-related stocks on the Tokyo Stock Exchange earlier this year, has seen its market cap decline by 56% since June 21.
The downturn has not been limited to these two companies. Many of the roughly 200 publicly traded firms holding Bitcoin on their balance sheets have faced steep declines, prompting analysts to question the sustainability of corporate Bitcoin treasury strategies.
Some companies have even been forced to sell portions of their BTC reserves to service outstanding debts, further adding pressure to the sector.
External Factors Contributing to Market Weakness
Aside from individual company fundamentals, broader macroeconomic factors have weighed heavily on Bitcoin and related equities. The U.S. government shutdown has been one of the primary drags on investor sentiment in recent weeks, slowing down capital flows into risk assets, including cryptocurrencies.
However, the mood may be shifting. Multiple U.S. media outlets reported on Sunday that the Senate reached an agreement to pass a package of budget bills to end the shutdown.
Shortly after the reports emerged, Bitcoin’s price jumped 2% to $106,430 within 50 minutes — a sign that renewed liquidity and stability in U.S. markets could provide relief to crypto investors.
Analysts Expect Potential Upside for Treasury Stocks
The unwinding of bearish positions, combined with easing macroeconomic pressures, is fueling cautious optimism that Bitcoin treasury stocks could soon recover.
MicroStrategy, which remains the largest corporate Bitcoin holder, may benefit from renewed institutional demand and improved liquidity conditions. The company’s long-term strategy of accumulating Bitcoin has positioned it as a proxy for Bitcoin exposure in traditional equity markets — a narrative that could regain strength as market confidence returns.
If Bitcoin continues to trade above the $100,000 mark, analysts suggest MicroStrategy’s equity value could rise accordingly, given its leverage to Bitcoin’s price movements.
Still, risks remain. Any significant decline in Bitcoin’s price could quickly erode MicroStrategy’s asset value, and the company’s reliance on debt and equity issuance to fund purchases continues to draw scrutiny.
A Turning Point for Bitcoin Treasury Firms
For now, the closing of Chanos’s short position serves as a notable indicator that the worst may be behind Bitcoin treasury companies. As the market stabilizes and macroeconomic uncertainty eases, the sector could be poised for a gradual recovery.
While it’s too early to call a full-fledged bull market, signs of bear market exhaustion are becoming evident. If Bitcoin maintains its current trajectory and corporate demand remains steady, treasury-focused firms like MicroStrategy and Metaplanet could lead the next phase of institutional-driven growth in the crypto ecosystem.
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