According to Woofun AI, Strategy (MSTR.US), the world's largest Bitcoin holder, is facing a serious crisis of being removed from major global stock price indices. The core trigger is that the index compiling agency MSCI (MSCI.US) (Morgan Stanley Capital International) decided to exclude companies that lack actual business operations from the main stock price index.
This rule change directly threatens Strategy (MSTR.US)'s position as a component of the index, which in turn could trigger a large-scale sell-off of passive funds tracking the index and seriously impact its financing structure for purchasing BTC through the issuance of shares.
The timeline and evaluation logic of the new regulations have gradually become clear. MSCI (MSCI.US) officially announced the introduction of a new standard on the 15th (local time) to remove non-operating companies from the Global Investment Feasibility Market Index. The revised standard will be applied when the market closes on November 30.
It is worth noting that this decision does not mean that Strategy (MSTR.US) will be immediately removed from the index, as MSCI (MSCI.US) will evaluate existing companies included in the index on financial standards to determine whether they have the ability to actually operate their business. MSCI (MSCI.US) plans to partially revise its classification criteria for non-operating companies announced on August 3. The core idea is not to guarantee that a company is eligible to be included in the index just because it is a listed company, but to comprehensively evaluate its actual business operation status and financial characteristics. As a result, there is a significant increase in the possibility that Strategy (MSTR.US) will lose its eligibility for inclusion in the index, and its final fate will be revealed at the end of November.
Strategy's (MSTR.US) business transformation is the root cause of its risk of delisting. The company was originally an enterprise software company, but after Chairman Michael Saylor launched a Bitcoin purchase strategy, it has actually transformed into a business holding digital assets. Currently, its Bitcoin holdings are worth around $70 billion. In order to maintain this huge asset scale, the company raised capital by issuing various financial products such as stocks, bonds, and preferred shares, and then continued to buy BTC.
However, this structure, which is centered on financial engineering and lacks traditional physical business support, is likely to meet MSCI (MSCI.US)'s new classification criteria for non-operating companies. MSCI (MSCI.US) stated that companies currently included in the index will only be excluded if they are unable to meet multiple financial requirements. Therefore, whether Strategy (MSTR.US) will eventually be eliminated will also depend on the detailed criteria for implementation and the results of the financial evaluation.
If the delisting becomes a reality, the market will face enormous passive capital outflow pressure. Following the announcement, Strategy (MSTR.US) shares fell about 2% in after-hours trading. What the market is worried about is that after the index is removed, it will trigger large-scale stock sell-off. ETFs and index funds that track the MSCI (MSCI.US) index will have to adjust their holding ratio once the constituent stocks of the index change.
If Strategy (MSTR.US) is removed from the index, the funds tracking the index are likely to mechanically sell stocks. According to data compiled by Woofun AI, JPMorgan Chase (JPM.US) estimated last year that if Strategy (MSTR.US) were excluded from the MSCI (MSCI.US) index, there could be a stock sell-off of up to 2.8 billion US dollars.
If other major indices take similar steps, there could be an additional $8.8 billion selling pressure. Taken together, the potential sell-off would amount to $11.6 billion. However, this is not a definitive amount of actual sell-off, but rather an estimate based on possible next steps other index providers may take.
Industry opinions have further revealed the importance of index inclusion to Strategy (MSTR.US). Brian Dobson, general manager of ClearStreet's technology research division, pointed out that for companies like Strategy (MSTR.US), it is important to be included in the index because it can provide them with continuous buying demand, from regular share purchases in pension plans to mutual fund investments. He added that if the company is removed from the index, investors who copy the index may sell their shares, causing short-term selling pressure.
This withdrawal of passive capital not only affects stock prices, but also shakes the market's confidence in the company as a long-term investment target. Especially when institutional investors rely on indexed strategies for asset allocation, changes in constituent stocks are often viewed as a sign of fundamental or compliance risk.
The deeper crisis lies in the sustainability of its financing model. The core of Strategy (MSTR.US)'s Bitcoin purchase strategy is to raise capital through the capital market. When the share price is higher than the net asset value (NAV) of the BTC it holds, the company raises capital by issuing new shares before using those funds to buy BTC. When the share price premium is high enough, this approach can relatively reduce the impact of shareholder value dilution due to the issuance of new shares, while also increasing BTC holdings. But as the share price premium shrinks, the effectiveness of this strategy has also decreased. Existing shareholders feared that issuing new shares would dilute their shares, so Strategy (MSTR.US) began shifting financing channels to preferred shares.
Recently, as the appeal of preferred shares has also declined, the company even requested shareholders' approval to pay dividends every day instead. ToPrime CEO Alexander Bloom said that Strategy (MSTR.US)'s entire operating model of further buying BTC by issuing shares will become more difficult. He also pointed out that companies that hold digital assets are not considered traditional operating enterprises, so it is not surprising that major index providers are wary of letting investors get involved in such highly volatile companies. Under such circumstances, if the index is removed, the stock price will face further downward pressure, and the conditions for raising capital by issuing new securities will also become worse.
Faced with the accusations, management voiced strong opposition. Strategy (MSTR.US) Chairman Michael Saylor strongly opposed MSCI (MSCI.US)'s move. In an interview with Bloomberg TV this week, he believes that the amount of capital controlled by MSCI (MSCI.US) is actually very small, and that the decision was based on prejudice against digital assets. Saylor criticized MSCI (MSCI.US) for valuing specific companies' business models, believing that this would set a bad precedent.
However, this decision by MSCI (MSCI.US) will not force Strategy (MSTR.US) to sell BTC. The first thing affected is Strategy (MSTR.US) shares, and the BTC assets it holds will not be automatically disposed of. The market is also watching, and this decision will affect not only Strategy (MSTR.US), but also other listed companies that hold large amounts of digital assets such as BTC. At the end of November, the key is whether Strategy (MSTR.US) will actually be excluded according to MSCI (MSCI.US)'s new standards.
If it is actually removed, in addition to stock price shocks caused by passive capital outflows, the sustainability of the company's digital asset financing strategy to increase BTC holdings by issuing shares will also be tested once again.