MSCI Removes Strategy from Index; $2.8 Billion Sell-Off Looms

MSCI is removing Strategy — the largest corporate holder of Bitcoin (BTC) — from its MSCI USA Index, effective at the market close on November 30. The index provider confirmed the deletion in its November review filing released Wednesday, prompting a mandatory sale by passive funds.

Passive index funds have no discretion over their holdings. When a company is removed from the index, they are forced to sell. JPMorgan analysts estimated last year that the deletion could drive roughly $2.8 billion in Strategy shares out of such funds, though that estimate was based on MSCI’s initial proposal rather than the final methodology.

Why did MSCI cut Strategy?

On October 15, MSCI introduced a new classification test. Firms lacking significant operating assets are now considered “non-operating” and are no longer eligible for MSCI’s global indexes.

Strategy — formerly MicroStrategy — still runs a software business. However, its balance sheet is overwhelmingly weighted with 850,364 Bitcoin, purchased for $64.16 billion, according to its latest SEC filing.

Metaplanet, a Japanese firm that also holds Bitcoin as a treasury asset, was likewise slated for removal on MSCI’s preliminary list from October.

Has the market already priced it in?

On Wednesday, Strategy shares ended regular trading at $122.35, a gain of 1.06%. After the list was released, they fell 0.85% in extended trading to $121.31.

Strategy has maintained that the rule does not harm its operations.

“While not material to $MSTR, the proposal is misguided, flawed, and conflicts with established securities laws and accounting principles.”

The key date is November 30, when index-tracking funds are required to execute trades. JPMorgan estimated that an additional $8.8 billion could exit if other index providers adopt similar rules.

Bitcoin treasury firms pitched Wall Street on a single concept: gaining Bitcoin exposure through the stock market. Under MSCI’s new classification, that strategy no longer qualifies as an operating business.

“MSCI should be a mirror of the market, not an arbiter of it,” said Michael Saylor, founder and chair of MicroStrategy.