Michael Saylor’s Strategy is staring at one of its biggest tests yet as the stock risks being dropped from major benchmarks that helped pull its Bitcoin bet into mainstream portfolios.
In a note this week reported by Bloomberg, JPMorgan analysts said Strategy risked being dropped from MSCI USA and the Nasdaq 100. They estimated that MSCI removal alone could trigger up to $2.8B in outflows, with more if other index providers follow.
It would chip away at the institutional credibility that once made Strategy a popular way for fund managers to gain regulated access to the world’s largest cryptocurrency. Strategy’s ascent followed a simple flywheel. The firm sold stock, bought Bitcoin, then used each rally in the token to justify more issuance and more accumulation. At the peak, its market value traded far above the value of its Bitcoin holdings.
For a business that built its brand on wrapping Bitcoin exposure inside an equity ticker, index removal would hit more than trading volumes.
MSCI is proposing to exclude from its Global Investable Market Indexes any company whose digital asset holdings account for 50% or more of total assets. A spokesperson for MSCI told Bloomberg that the firm does not “speculate on future index changes.”
Index rules are also shifting around it. In an Oct. 10 update on its consultation, MSCI said some market participants view digital asset treasury companies as closer to investment funds, which are not eligible for index inclusion.
