MSCI will remove Strategy from its indexes after the November 30 close; the decision could indirectly constrain the company’s model for financing Bitcoin purchases.
According to the decision reported by CoinDesk, MSCI confirmed that it will remove Strategy from widely followed equity indexes, including the MSCI USA. The “non-operating companies” criterion adopted on October 15 also led to the removal of Tokyo-listed Bitcoin treasury company Metaplanet from the MSCI Japan Small Cap Index.
Funds tracking the indexes may have to sell their Strategy shares when the changes take effect. The decision does not delist the company or force it to sell its Bitcoin. However, reduced passive-fund demand could affect Strategy’s ability to fund Bitcoin purchases by issuing new shares.
How could the index removal affect BTC purchases?
BloFin Research estimates that funds could sell approximately 13 million Strategy shares. Strategy’s response to MSCI points to the same amount. That represents 3.1 percent of the company’s shares outstanding and is below typical daily trading volume. At Wednesday’s prices, the shares are worth approximately $1.6 billion in total.
The company’s purchasing model depends on how high its share price is relative to the value of its Bitcoin holdings. Strategy’s mNAV ratio, which shows its market capitalization relative to its net asset value, fell from a 3.4x peak in November 2024 to about 1.08x. When the ratio is above 1, the company can sell shares for more than the value of its Bitcoin holdings to fund new purchases. As the ratio approaches 1, issuing new shares becomes less advantageous.
A filing for the week ended November 8 revealed a shift in how the company is using its funds. Strategy raised $283.8 million by selling 2.05 million common shares. It allocated $81.9 million of that to the purchase of 1,036 Bitcoin and $188.3 million to repurchasing its STRC preferred shares. It added the remaining $13.6 million to its cash reserve. As of November 8, the company had a $4.77 billion cash reserve.
Analysts differ on the impact of selling pressure
10x Research founder Markus Thielen said the MSCI decision had largely been priced in and he did not expect it to affect Bitcoin. According to Thielen, although some funds may have to sell Strategy shares, the shares could find buyers at lower prices; some funds also already hold positions below the index weighting.
Independent Bitcoin analyst Derin Olenik argued that beyond the potential selling, the decision could damage the institutional adoption narrative. JPMorgan’s estimate of $2.8 billion in selling pressure has also drawn attention, although that calculation was based on MSCI’s initial proposal, which preceded its latest decision. The bank had projected that the estimate could rise to $8.8 billion if other index providers took similar action.
Thielen and Olenik argued that Bitcoin treasury companies should put their holdings to work in yield-generating activities rather than simply accumulating BTC. Thielen likened this approach to asset management, while Olenik pointed to company models that develop Bitcoin infrastructure and increase network usage.
Not investment advice.