Key Points:
- The mNAV metric—comparing MSTR’s market valuation to the value of its Bitcoin holdings—has collapsed from 3.4x to nearly parity, weakening the original bearish case tied to overvaluation.
- Other major short sellers, including Kerrisdale Capital, built similar positions against MSTR and Ethereum-focused treasury firms, arguing that ETF competition and inflated valuations justified skepticism.
- MSTR’s share price has fallen more than 51% since its July 2025 high of $457, settling around $219.68, delivering substantial gains to short sellers during this period.
- Despite recent weakness in treasury inflows—down 98% from a $4 billion weekly peak to just $45 million—MicroStrategy has expanded its Euro-denominated STRE note offering to fund additional Bitcoin purchases.
- Analysts interpret the closing of prominent short positions as a potential inflection point, signaling possible near-term stabilization or recovery for MSTR and renewed institutional appetite for Bitcoin treasury strategies.
The Retreat of High-Profile Short Sellers
The closing of James Chanos’s short position on MicroStrategy marks a notable shift in market sentiment toward Bitcoin-linked equities. Chanos, known for his prescient bearish calls, initiated the trade when MicroStrategy’s market-to-net-asset-value (mNAV) stood well above 2.0x in mid-2025. At that level, the stock traded at a steep premium to the actual value of its Bitcoin holdings, suggesting speculative excess. His strategy involved shorting MSTR while simultaneously holding a long position in Bitcoin itself—an approach designed to isolate the perceived overvaluation of the corporate wrapper around the digital asset.
By late 2025, however, that premium had withered. The mNAV ratio, once as high as 3.4x in prior cycles, now hovers just above 1.0x. This compression reflects a broader recalibration of investor expectations, where the market no longer rewards MSTR with a significant valuation premium for its Bitcoin exposure. Chanos acknowledged that while further downside in the ratio remains possible, the core rationale for his bearish stance has largely run its course. Exiting the position at this juncture does not necessarily signal bullish conviction but rather an admission that the asymmetry of the original trade has diminished.
Treasury Inflows: From Euphoria to Standstill
The trajectory of institutional Bitcoin treasury inflows over the past year tells a story of rapid ascent followed by abrupt contraction. In November 2024, during a strong Bitcoin rally, weekly inflows into digital asset treasuries surged to $6 billion—triple the $2 billion baseline observed earlier that year. This wave coincided with heightened enthusiasm for corporate Bitcoin adoption, with MicroStrategy serving as the de facto proxy for leveraged crypto exposure without direct custody risk.
Yet everything changed after July 2025. As Bitcoin’s price plateaued and macro uncertainties mounted, the pace of treasury accumulation slowed dramatically. Weekly inflows tumbled to just $45 million—a staggering 98% drop from their peak. The primary culprit was the erosion of MSTR’s mNAV premium, which removed a key incentive for treasury firms to allocate through equity wrappers. With ETFs offering cleaner, more liquid exposure, many institutional players redirected capital away from the more complex treasury model. This environment created a feedback loop: lower premiums discouraged new inflows, which in turn reinforced bearish positioning.
Signals of a Potential Reversal
Despite the prolonged slump, recent developments hint at a possible turning point. MicroStrategy’s decision to expand its STRE note offering—from €350 million to €620 million—demonstrates continued conviction in Bitcoin’s long-term trajectory. The proceeds are earmarked explicitly for additional BTC purchases, reinforcing the company’s role as a dedicated treasury vehicle even amid market headwinds. This move suggests management believes current Bitcoin prices present a strategic entry point, regardless of near-term equity volatility.
More importantly, the unwinding of high-profile short positions adds credence to the idea that the most aggressive downside pressure may be easing. Pierre Rochard, a seasoned voice in the Bitcoin treasury space, described the current phase as the tail end of a bear market specific to Bitcoin-holding corporations. He emphasized that while volatility will persist, the covering of shorts by sophisticated players like Chanos often precedes a period of price discovery and renewed interest. For bulls, this dynamic offers a glimmer of hope: if MSTR’s stock can stabilize or rebound modestly, it could reignite appetite for Bitcoin treasury strategies across the institutional landscape.
Conclusion
The narrative around MicroStrategy and Bitcoin treasury inflows has entered a transitional phase. The collapse of the mNAV premium eroded a key pillar of speculative demand, leading to a sharp deceleration in institutional capital flows. Yet the retreat of prominent short sellers and MicroStrategy’s continued commitment to Bitcoin accumulation suggest that the worst of the downward pressure may be behind us. While a full recovery in treasury inflows is not guaranteed, the market appears to be reassessing risk-reward dynamics with greater nuance. If MSTR finds support near current levels and Bitcoin maintains baseline institutional relevance, the groundwork could be laid for a measured revival in corporate Bitcoin adoption.