MSCI will remove Strategy from its MSCI USA Index on November 30, raising concerns about potential $8.8 billion outflows and pressure on MSTR stock.

Table of contents
  • MSCI will remove Strategy and other companies from its indexes under new eligibility rules
  • Strategy holds 850,364 BTC worth approximately $64.16 billion
  • JPMorgan estimates potential outflows could reach $8.8 billion if other index providers follow MSCI

Strategy, the largest public holder of Bitcoin, is facing a fresh setback as MSCI prepares for a major move. Under new rules targeting companies with large investment holdings and limited operating assets, MSCI is planning to remove the MSTR stock from the MSCI USA index. The decision could trigger billions of dollars in outflows as index-tracking funds will be forced to sell their shares.

MSCI to remove Strategy from its US index

According to the latest reports, MSCI will remove Strategy from its MSCI USA Index at the close of November 30. The decision is based on new eligibility rules that target companies with large investment holdings and limited operating assets.

With the new development, the Bitcoin treasury company could lose support from funds that track the index. These funds usually hold stocks based on their index membership. When a company is removed from the index, they must sell their shares to match the updated index.

Notably, MSCI introduced the new rules on October 15. The move was to review companies with limited operating activities. Although Strategy still operates a software business, most of its balance sheet is made up of Bitcoin. The latest SEC filing reveals that the company holds 850,364 BTC, purchased for about $64.16 billion.

It is also worth noting that Strategy is not the only company affected by the decision. Another major Bitcoin treasury company, Metaplanet, is facing the same pressure from MSCI. UK-based uranium investment company Yellow Cake is also set to be removed from MSCI indexes under the new rules. MSCI stated that these businesses may not meet its operating asset requirements.

How will the decision affect MSTR stock?

Significantly, MSCI’s removal could create a notable selling pressure on Strategy shares. Index-tracking funds will be forced to adjust their holdings when MSCI makes changes to the companies included in its benchmarks.

However, this does not mean that all investors will sell their MSTR shares. The funds that follow the MSCI USA index will have to reduce or close their positions in response to the removal. The selling pressure could trigger a major correction in the stock price. The shares closed on Wednesday at $122.35, with a 1.06% hike. But during the overnight hours, the stock price dropped by about 2.17% to reach $119.70.

Previously, JPMorgan analysts had estimated that MSCI’s removal of Strategy could lead to around $2.8 billion in selling pressure on the MSTR stocks. But now, the analysts projected that the potential outflow could reach about $8.8 billion if other major index providers follow the same decision.

Strategy calls the proposal misguided

Interestingly, Strategy opposed MSCI’s new classification rules. The Bitcoin treasury company argued that the changes unfairly target businesses with large digital asset holdings. The firm also questioned MSCI’s definition of operating and non-operating companies.

According to Strategy, the proposal is misguided. The company stated, “While not material to $MSTR, the proposal is misguided, flawed, and conflicts with established securities laws and accounting principles."

Nynu V Jamal is a Crypto Journalist at CoinCodex with a background in English Literature and a strong interest in blockchain technology, cryptocurrencies, and digital finance. Holding a Master's degree in English Literature and having qualified for the UGC NET, she combines analytical research with clear, engaging writing to make complex crypto topics accessible to a broad audience. When she's not writing about crypto, she enjoys reading, singing, and exploring creative storytelling.