Strategy stock sheds 5% amid MSCI index removal, Bitcoin sell-off
Shares of Michael Saylor's Bitcoin treasury company Strategy fell 6.49% on Thursday, closing at $114.41, a day after MSCI confirmed the company's removal from its global equity indexes.
The decline coincided with a broader cryptocurrency market sell-off, with Bitcoin trading near $71,340, down 4.3% over the past 24 hours. The total cryptocurrency market capitalization declined 3% to around $2.49 trillion.
Index removal impact
On Wednesday, MSCI confirmed that Strategy would be removed from its global equity indexes after the Nov. 30 market close, a move that could trigger selling by funds tracking the benchmarks. JPMorgan previously estimated that the exclusion could result in roughly $2.8 billion in selling pressure.
Index inclusion meant ordinary passive investors, like someone holding a global index fund in their pension, were getting leveraged Bitcoin exposure they never chose. MSCI just fixed that.
Company response
In its Aug. 31 response to MSCI's proposed rules, Strategy argued that the changes were a pretext for targeting digital asset treasury companies. The company also downplayed the potential financial impact, noting that MSCI-linked funds held approximately 13 million of its shares, representing just 3.1% of its basic shares outstanding.
MSCI has said publicly what many people in institutional finance have been saying privately for a while: buying an asset and holding it isn't an operating business. It's a fund that doesn't follow fund rules.
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