Veteran short seller James Chanos defended on Sunday his strategic arbitrage trade of shorting Strategy Inc.’s (NASDAQ:MSTR) stock while going long on Bitcoin (CRYPTO: BTC), as he continues to attack what he thinks is an unjustified premium on the stock relative to its BTC holdings.
What happened: Chanos took to X to highlight the dynamic nature of the strategy, i.e., the one that involves adjusting the portfolio allocation based on market conditions and performance.
“You do realize that the mNAV arb trade is not a static trade, right?” he said, in response to a remark by an X user, Arbitrageur. “If BTC/share increases over time, you have to buy more Bitcoin per share of MSTR to be properly hedged.”
The user had found fault with Chanos’ position, stating that while the premium may collapse to the net value of Strategy’s Bitcoin holdings, the BTC per share will be far larger than it is now.