MSCI Drops Strategy From Its US Index: Will $2.8 Billion in Forced Selling Hit MSTR?
MSCI will remove Strategy, the largest corporate holder of Bitcoin, from its MSCI USA Index at the close of November 30, triggering forced selling of approximately $2.8 billion in shares.
The index giant confirmed the cut in its November review filing on Wednesday, setting up a forced exit for passive fund money. When a company leaves an index, tracking funds must automatically sell their shares, regardless of their investment thesis.
JPMorgan analysts estimated last year that removal could push about $2.8 billion of Strategy shares out of these funds. That figure was based on MSCI's earlier proposal, not the final rule. Strategy shares closed at $122.35 on Wednesday, up 1.06%, but slipped 0.85% in after-hours trading as the news broke.
New Operating Assets Rule
MSCI adopted a new test on October 15 that requires companies to have substantial operating assets to remain eligible for its global indexes. Strategy, formerly MicroStrategy, still operates a software business, but its balance sheet is dominated by 850,364 Bitcoin worth $64.16 billion, according to its latest SEC filing.
Japan's Metaplanet, another Bitcoin treasury firm, was also marked for deletion on MSCI's October draft list. This change effectively ends the classification of Bitcoin treasury companies as operating businesses under MSCI's framework.
Market Reaction
Strategy has argued the rule does not materially impact its business. The company criticized MSCI's decision, stating: "While not material to $MSTR, the proposal is misguided, flawed, and conflicts with established securities laws and accounting principles."
MSCI should be a mirror of the market, not an arbiter of it.
The real test comes on November 30, when tracking funds must execute their trades. JPMorgan estimated a further $8.8 billion could leave if other index providers follow MSCI's lead, potentially reshaping the market for Bitcoin-related stocks.
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