With short sellers exiting MSTR, the Bitcoin (BTC) treasury bear market may be coming to an end.

Shares of Bitcoin Bond Company (BTC) may be nearing the end of a period of price weakness after an investment firm said it had closed out its short position in Strategy, the largest corporate Bitcoin holder.

James Chanos, founder of Kynikos Associates, said on Sunday that his investment firm closed out its short position in Michael Saylor's Strategy (MSTR) and its long position in Bitcoin at the start of trading on Friday.

"The Bitcoin Bond Company bear market is gradually coming to an end," responded Pierre Rochard, CEO of The Bitcoin Bond Company.

Chanos said Strategy's share price has fallen about 50% from its 2025 high, and the company's market capitalization-to-book ratio (mNAV) has compressed to 1.23 times.

"Closing out this trade when mNAV is below 1.25 times is prudent, a figure that has declined from about 2.0 times in July 2025," Chanos wrote in a report.

He added that MSTR's implied premium—its enterprise value minus the value of its 641,205 BTC holdings—has fallen from approximately $70 billion in July to $15 billion, suggesting the company's current valuation may be more reasonable.

While MSTR may still experience further mNAV compression, especially if it issues more common stock, "this argument has largely been realized," Chanos said.

"This is the reversal signal you'd want to see," Rochard said.

Source: Pierre Rochard

In recent months, many of the 200 publicly traded companies holding Bitcoin on their balance sheets have seen their share prices plummet, leading some analysts to question the sustainability of Bitcoin treasury strategies.

MSTR and Metaplanet have fallen sharply from mid-year.

Strategy has been hit hardest in terms of total value, with its market capitalization falling more than 43% from $122.1 billion in July to $69.5 billion as of Friday.

Metaplanet, one of the best-performing stocks on the Tokyo Stock Exchange in early 2025, has also seen its market capitalization slashed by 56% since June 21.

Other Bitcoin-buying companies have even had to sell some of their BTC holdings to pay off outstanding debts.

Cryptocurrency market pressures may ease soon.

One of the biggest factors hindering the market was the US government shutdown; however, several US media outlets reported on Sunday that the Senate had reached an agreement to pass a budget package to end the shutdown.

Within 50 minutes of the reports, Bitcoin rebounded 2% to $106,430, suggesting that the reopening of the government could boost cryptocurrency market sentiment.