Strategy (MSTR) faces a major institutional test as MSCI prepares to release the results of its November index review.
The decision could have serious implications for the Bitcoin cash company, as a potential removal would put billions of dollars in passive investment outflows at stake.
MSTR Investors Listening
JPMorgan analysts previously estimated that funds that track MSCI indexes could be forced to sell about $2.8 billion worth of MSTR stock if the stock is excluded. If other major index providers follow suit, total outflows could reach $8.8 billion.
The index changes are expected to take effect at the close of November 30. As reported CryptoPotato Earlier, Strategy opposed MSCI’s proposal and argued that the rules effectively target digital asset treasury companies under a different name. The company also challenged MSCI’s classification of certain companies as non-operating businesses. She said the definition had no basis in U.S. GAAP, IFRS or any other recognized legal framework.
Strategy maintained that its Bitcoin operations qualified as an operating segment under U.S. accounting rules, consistent with its discussions with SEC staff. He also warned that MSCI’s proposal introduced subjective policy decisions into index construction and could undermine the neutrality that investors expect from index providers. Strategy has asked MSCI to withdraw the proposal, but the upcoming decision could add another challenge to Michael Saylor’s Bitcoin accumulation strategy.
Impact on BTC
Market commentator ‘KALEO’ believes The strategy could be among the companies removed, but the threat may already be addressed. He said MSCI finalized its new eligibility rules on October 15. Since then, Bitcoin has steadily declined. Concerns remain over whether Strategy could eventually face cash flow constraints and be forced to sell some of its BTC holdings to meet its financial obligations.
However, the trader believes that this scenario is now much less likely than it was over the summer. His reasoning is that Strategy has demonstrated a willingness to dilute its common shareholders and adjust its financial metrics to raise capital rather than sell Bitcoin. He expects this approach to continue, which will allow the company to fund its obligations while retaining its BTC holdings.
Although KALEO views the potential removal of MSCI as a negative development for MSTR in the long term, it does not expect it to have a fundamental impact on Bitcoin itself.
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