Institutional sentiment shifts as Kynikos Associates unwinds its bearish bet on MicroStrategy amid valuation normalization
The prolonged bear market for Bitcoin treasury stocks may be nearing its conclusion. A notable shift in institutional positioning occurred after James Chanos’ Kynikos Associates closed its short position against MicroStrategy (MSTR) — the largest corporate holder of Bitcoin. The move signals that the decline in Bitcoin treasury valuations may have run its course, sparking optimism among investors tracking the digital asset sector.
Institutional Shift Signals Market Bottom
Chanos revealed on Sunday that his firm unwound its short position on MicroStrategy and its long position on Bitcoin (BTC) as the trading week began. “It is prudent to cover this trade with mNAV below 1.25x, having dropped from ~2.0x as recently as July 2025,” he stated, highlighting that MSTR’s market Net Asset Value (mNAV) has compressed significantly.
The company’s implied premium — measured by its enterprise value minus the value of its 641,205 BTC holdings — has dropped from around $70 billion in July to $15 billion. This sharp contraction suggests that MicroStrategy’s valuation is now more aligned with its underlying assets, reducing the risk of further downside.
Pierre Rochard, CEO of The Bitcoin Bond Company, commented that, “This is the kind of signal you want to see for a reversal,” indicating that the Bitcoin treasury company bear market is gradually coming to an end.
Bitcoin Treasury Stocks Face Heavy Losses
Despite the improving outlook, MicroStrategy’s market cap remains down 43% from its July high of $122.1 billion to $69.5 billion as of Friday. Similarly, Metaplanet, one of the standout performers on the Tokyo Stock Exchange earlier this year, has seen its market cap fall by 56% since June.
Several other Bitcoin-holding firms have been forced to liquidate portions of their BTC reserves to manage outstanding debts, reflecting how challenging the macroeconomic environment has been for corporate Bitcoin investors.
Government Resolution Could Boost Crypto Sentiment
Adding to the optimism, the U.S. Senate’s agreement to end the government shutdown has sparked renewed confidence across financial markets. Bitcoin jumped 2% to $106,430 within an hour of the news, signaling that easing political uncertainty could strengthen overall crypto market sentiment.
With institutional short positions closing and macroeconomic pressures easing, analysts suggest that Bitcoin treasury stocks could soon emerge from their prolonged downturn — marking a potential turning point for crypto-related equities.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.