Jim Chanos is a Wall Street legendary short seller, known for precisely targeting companies with financial problems, with his famous battle being shorting Enron. In 2001, he discovered its financial fraud a year before Enron's bankruptcy, heavily shorted the stock and profited handsomely, becoming famous overnight. He is the founder of the short fund Kynikos Associates, which was closed in 2023 and transitioned to a family office.
Other classic short cases include Luckin Coffee, China Evergrande Group, and Tesla, among others. He has long questioned TSLA's valuation, but Tesla's strong stock performance in recent years has cost him dearly. His investment philosophy focuses on finding value traps, excelling at analyzing financial statement loopholes to identify problematic companies. His most recent move was to prominently short Strategy (formerly MicroStrategy), criticizing its "Bitcoin proxy stock" premium as absurd, while simultaneously buying Bitcoin as a hedge.
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ToggleFamous Short Seller: Holding BTC and Shorting MSTR as a Hedging Operation
Jim Chanos revealed that he is simultaneously executing a hedging operation: shorting Strategy stock while directly buying Bitcoin. He explained: "We are simply replicating MicroStrategy and its co-founder Michael Saylor's operation," adding: "Selling MicroStrategy stock and holding Bitcoin is equivalent to acquiring $2.5 worth of value at a $1 cost."
Strategy continues to increase its Bitcoin holdings through debt, causing its stock price to have a significant premium relative to its Bitcoin holdings' value. Chanos criticized that this model is triggering an absurd mimicry effect, with more companies selling the story of "we will hold Bitcoin in corporate form" to the retail market, demanding the same premium.
(Famous Short Seller Jim Chanos: Longing Bitcoin + Shorting MicroStrategy for Arbitrage)
"MicroStrategy and its imitators are essentially packaging corporate financial operations as Bitcoin investment tools," Chanos told CNBC: "We are just replicating their strategy, selling overvalued MSTR stocks and reinvesting in actual Bitcoin."
Over the past year, Strategy's stock price has surged over 220%, while Bitcoin rose about 70% in the same period. Chanos emphasized that this price difference reflects retail speculative enthusiasm: "This is not just an arbitrage opportunity, but also a thermometer for observing retail market frenzy."
Strategy Believers: Shorting MSTR and Longing BTC Strategy is BTC Fuel
Fenix, CEO of Teahouse Finance, stated that many funds are using the tactic of "shorting MSTR and longing BTC", watching MSTR rise from 150 to 400, causing short sellers immense pain. Currently, MSTR's "days to cover" remains stable at around 1.5 days, which is a very healthy indicator. Therefore, we should welcome this strategy with open arms, as MSTR's essence is based on BTC's long-term growth value.
He pointed out that Michael Saylor has established a Bitcoin moat with an average purchase price of around $70,000 per coin. Unless BTC dramatically falls below $70,000 in the future, it is impossible to truly break through MSTR's stock price defense. The strategy of everyone "shorting MSTR and longing BTC" will actually further push up BTC's price, ultimately being completely crushed by new incoming buyers.
He explained that traditional finance has this arbitrage idea because traditional funds cannot accept MSTR's debt-based BTC purchasing model, viewing it as a Ponzi scheme. However, Michael Saylor's brilliance lies in foreseeing the continuous decline of the US dollar's purchasing power. By continuously buying BTC, a scarce asset, and using debt (currency that will continue to depreciate) to purchase more scarce assets, it is a complementary two-sided strategy.
Risk Warning
Cryptocurrency investment carries high risks, with potentially significant price volatility. You may lose all your principal. Please carefully assess the risks.
Recently, defillama co-founder @0xngmi stated: "In the past two months, defillama has received many contacts from traditional financial institutions about DeFi data, far exceeding previous quantities, suggesting traditional finance's interest in decentralized finance has clearly increased."
ToggleAave is the most standardized on-chain lending, positioned as a composable and non-custodial banking system
KOL Yueya.eth also pointed out that established protocols like Aave and Curve are the easiest DeFi to enter institutional perspectives. He analyzed: "This is an important signal: TradFi is systematically studying DeFi. They are not coming to create a narrative, but to re-examine: which protocols have clear structures, controllable risks, and clear revenue logic. In other words, which can enter their risk control framework and allocation models."
He believes Aave is the most standardized on-chain lending protocol, with clear floating rates, collateral rules, liquidation lines, standard logic, and transparent parameters. The isolated market mechanism introduced in Aave V3 aligns with the institutional "risk zoning" management approach. The author adds: Risk zoning is a process of analyzing risk-related data (such as credit risk, market risk, operational risk) and dividing financial institutions' assets, customers, or businesses into different risk levels. Bank warnings to users are one example.
Additionally, Aave's full-chain data openness and user-friendly interface are suitable for risk control modeling and backtesting. In short, for TradFi, it's like a "composable, non-custodial banking system".
Curve is the underlying settlement layer for stablecoin liquidity
Curve is the underlying settlement layer for stablecoin liquidity, with its low-slippage AMM mechanism supporting large stablecoin exchanges, naturally becoming an "on-chain foreign exchange market". The veCRV comprehensive bribe model is gradually understood as a structure combining on-chain governance and revenue rights.
He points out that as stablecoins become a cross-border settlement tool, their system role is increasingly attracting attention. Institutions research Curve not to predict price movements, but to examine settlement efficiency and governance rationality. They want structure, not narrative.
How can DeFi enter institutional perspectives? Coin price is not the focus, data is clear, and returns are predictable
In summary, he believes whether DeFi can enter traditional institutional perspectives depends on:
- Is the data structure clear?
- Is the revenue model predictable?
- Can risk parameters be implemented?
- Can it be integrated into existing systems?
By the time these protocols truly pass institutional research, testing, and modeling verification, the market's pricing method for them may have already changed.
Risk Warning
Cryptocurrency investment carries high risk, and its price may fluctuate dramatically. You may lose all your principal. Please carefully assess the risks.
