Article by ChandlerZ, Foresight News
Strategy, which holds over 850,000 bitcoins, is awaiting MSCI's release of a list that could alter its shareholder structure.
The index provider MSCI has determined a new methodology to screen out non-operational companies that do not meet the requirements for its Global Investable Market Indexes. Strategy appeared on the previously announced potential removal list, and the final results are expected to be announced after 6:00 AM Beijing Time on November 12.
Strategy, which holds over 850,000 bitcoins with an accumulated purchase cost exceeding $64.1 billion, was previously on the candidate list for removal. If it is officially removed from the final list, globally passive tracking funds will be forced to rebalance their portfolios before the market close on November 30, triggering a rigid selling pressure of $1.57 billion to $2.8 billion. This event will directly suppress Strategy’s equity premium and block its primary channel for channeling additional buying demand into the spot cryptocurrency market.
As of the close of U.S. markets on November 11 (Beijing Time), Strategy’s common stock, MSTR, closed at $121.07, down 3.60% for the day and approximately 6.4% from its closing price of $129.30 on November 5. On November 9, the company disclosed that, as of November 8, it held a total of 850,364 bitcoins, with an aggregate purchase cost of approximately $64.16 billion.
Why was the strategy removed from the index?
MSCI's global indices are widely used by funds to construct equity portfolios; whether a company remains in the index can affect the holdings of passive tracking funds.
In October last year, MSCI proposed to exclude treasury companies with digital assets accounting for 50% or more of total assets. In January, it decided to defer implementation in the February review and instead shift to a broader review of non-operational companies.
On October 16, MSCI finalized a new index eligibility rule, effective from the November index review, under which publicly listed companies that primarily derive value from holding assets rather than engaging in actual business operations may be classified as "non-operating companies" and lose eligibility for inclusion in the MSCI Global Investable Market Index. This means companies such as Strategy, Metaplanet, and Upexi, which rely on capital market financing to purchase cryptocurrencies, may no longer be regarded by MSCI as ordinary operating enterprises.
MSCI also released a list of potentially affected companies. Of the 22 companies, 14 are directly related to cryptocurrency: Strategy, Metaplanet, and SOL treasury company Upexi have been listed for removal, while another 11 companies, including SharpLink and Solana Company, have been placed under observation.
The new rules first assess whether a company’s asset structure contains sufficient operating assets. Companies that fail this initial check are then subject to five additional financial metrics: operating expenses, operating cash flow, fair value changes, and dependence on external financing. If four or more of these metrics are triggered, the company may lose its index eligibility. For companies already in the index, MSCI requires that they fail the screening in both of the last two reporting periods before being removed.
Of the five companies to be removed, three are digital asset treasury companies:
- Bitcoin Treasury Company Strategy;
- Bitcoin treasury company Metaplanet;
- SOL treasury company Upexi.
Two other entities are Yellow Cake, a UK uranium investment company, and SKEL, an Icelandic investment holding company, indicating that the rules are not formally targeted solely at crypto assets.
An additional 11 cryptocurrency-related companies have been placed on watchlist, including:
- ETH treasury company SharpLink;
- CC (Canton) Treasury Company Canton Strategic Holdings;
- ZEC treasury company Cypherpunk Technologies;
- SUI Treasury Company SUI Group;
- TON Treasury Company TON Strategy;
- BTC treasury company Capital B;
- SOL Treasury Company Solana Compan;
- SOL Treasury Company DeFi Development;
- WLFI Treasury Company AI Financial;
- RAIN Treasury Company Enlivex;
- GD Culture, a company that holds BTC and previously announced an allocation to TRUMP.
Strategy opposes the new approach, arguing that the company continues to operate as a software business and reports its Bitcoin operations as a business segment. MSCI’s new rules, in fact, once again target digital asset treasury companies. MSCI responds that the new screening methodology applies to companies with financial characteristics similar to investment vehicles and is not limited solely to firms holding crypto assets.
Rebalancing countdown: billions of dollars in mechanical liquidation
Once the strategy is removed, the direct selling pressure falls on its underlying stock, MSTR. Funds that fully replicate the relevant index typically need to sell their held constituent stocks; funds using sampling replication or other methods may adjust according to their investment strategy, and trading times and volumes may vary across different products.
J.P. Morgan’s previously published scenario model suggested that if all capital, including benchmark-aligned funds, fully exited, the upper limit of passive outflows could reach $2.8 billion. Strategy’s official quantitative estimate is more conservative, indicating that passive funds tracking this index hold approximately 13 million shares of MSTR, representing 3.1% of its total outstanding shares, equivalent to a current market value of about $1.57 billion.
Based on the closing price of $121.07 on November 11, this batch of shares is valued at approximately $1.57 billion. The company believes this amount is below its then-reported average daily trading volume and has limited impact on its operations.
However, higher trading volume does not mean that new sell orders will necessarily be absorbed by buyers near the original price. Some investors may have already traded based on anticipated news, and the actual price adjustment will depend on whether other buyers are willing to take on the shares. Passive funds selling MSTR will not directly sell the Bitcoin listed on Strategy’s balance sheet—the Bitcoin remains held by the company.
Will a stock market decline affect Bitcoin?
The real impact of passive capital exiting lies in breaking the arbitrage loop built by Michael Saylor on U.S. stock market liquidity.
The strategy’s success over the past four years relied entirely on the sustained high premium of its stock price relative to the underlying Bitcoin net asset value (mNAV). As long as this premium persisted, the company could issue shares at elevated prices through its ATM mechanism on U.S. stock markets, or issue low-interest convertible bonds to raise U.S. dollar cash. These raised fiat funds were unidirectionally injected by management into the spot crypto market to accumulate Bitcoin. The rapid expansion of Bitcoin reserves further fueled speculative sentiment among retail investors and hedge funds, driving up the stock premium and enabling the next round of larger equity financing.
Between November 2 and 8, Strategy sold 2.05 million shares of MSTR, generating $283.8 million in proceeds, and immediately converted $81.9 million of those proceeds into 1,036 spot bitcoins.
If the sustained selling pressure is removed, MSTR's stock price and valuation could be affected, reducing the amount of capital the company can raise per share issued in the future. To raise the same amount of capital, Strategy may need to issue more shares, diluting the ownership percentage of existing shareholders. If investors also demand higher returns, the cost of financing through preferred stock or debt could increase.
Funding pressure has further spread to Bitcoin, requiring companies to reduce future purchases, sell existing assets, or prompting other investors to adjust their positions simultaneously. Simply removing an asset from an index does not necessarily mean the Strategy must sell Bitcoin, nor can it be used to calculate how much Bitcoin’s price will decline as a result.
However, Strategy has already sold Bitcoin this year. The company disclosed that approximately $431.8 million from the proceeds of Bitcoin sales this year were used to support preferred stock dividends and STRC repurchases; meanwhile, the company continues to acquire Bitcoin. As of November 8, its dollar reserves dedicated to supporting preferred stock dividends and debt interest amounted to approximately $4.77 billion, with an additional $146.2 million in cash available for broader corporate purposes.
Even companies like Metaplanet, Upexi, and SharpLink have copied the financial engineering playbook of issuing stocks to hoard tokens. The core weakness of these companies is strikingly consistent: their core business generates minimal cash flow and relies heavily on asset premiums from public capital markets to sustain operations.
MSCI’s qualitative standards have established clear boundaries for traditional financial markets, formally severing the unconscious flow of passive capital to shell entities hoarding crypto assets. If index providers such as S&P and FTSE subsequently adopt similar rules, the golden window for global listed companies to extensively leverage secondary market equity to absorb crypto assets will face comprehensive constraints from the foundational structures of traditional finance.
