They believe the thesis has played out as mNAV compresses close to 1.0X.
Sellers’ exhaustion could allow bulls to step in for MSTR, and by extension boost inflows into BTC.
The legendary Wall Street short seller, James Chanos, has closed his short position on MSTR stock (Strategy), a trend that’s raising hopes for a potential recovery in treasury inflows.
Chanos explained his firm went short on MSTR and long Bitcoin [BTC], after the company’s mNAV (market-to-net-asset-value) began contracting last year. He added,
“It is prudent to cover this trade with mNAV below 1.25x, having dropped from ~2.0x as recently as July 2025. While we still believe there is more room for mNAV compression, the thesis has largely played out.”
For context, mNAV measures how a firm’s market value compares to its crypto holdings.
Higher readings indicate rising demand for leveraged BTC exposure via MSTR and, by extension, overvaluation compared to the stock.
However, that ratio has since fallen sharply from 3.4x to nearly 1x, explaining Chanos’ decision to cover his short — a move typically seen as bullish.
Kerrisdale Capital, another prominent short-seller, made a similar bet against MSTR last year — as well as BitMine, the leading Ethereum [ETH] treasury firm. Both cited inflated mNAVs and competition from Bitcoin ETFs as the core of their bearish theses.
Since July’s high $457, MSTR has dropped over 51% to $219.68, marking a windfall for bears like Chanos and Kerrisdale.
Still, with shorts now being covered, analysts expect near-term relief for MSTR and possibly for BTC treasury inflows.
Pierre Rochard, CEO of treasury firm Bitcoin Bond Company, noted,
“The Bitcoin treasury company bear market is gradually coming to an end. Expect continued volatility, but this is the kind of signal you want to see for a reversal.”
During Bitcoin rallies in late 2024 and mid-2025, inflows to Digital Asset Treasuries surged. For instance, weekly inflows tripled from $2 billion to $6 billion in November 2024, according to DeFiLlama.
After July 2025, however, the inflows weakened from about $4B to $45 million. A 98% decline in demand from treasury firms as they struggled with compressed mNAVs or the so-called “bear market.”
That said, MicroStrategy recently increased its Euro-based STRE note offering from €350 million to €620 million for fresh BTC purchases.
Still, it remains unclear whether bulls will step in at current MSTR levels to lift mNAV and revive treasury inflows into BTC.
