MSCI review puts billions in potential MSTR sales in focus

MSCI’s revised eligibility rules, approved October 15, target companies whose financial profiles resemble investment funds rather than operating businesses. The methodology assesses operating assets, then applies five financial tests covering assets, expenses, operating cash flow, fair-value exposure and reliance on external financing. A company can become ineligible if it fails at least four tests. Existing constituents must meet the exclusion conditions in their two latest annual reporting periods, though MSCI may also consider newer interim filings.

Strategy, the world’s largest corporate Bitcoin holder, has said in financial disclosures that it expects its common stock to be removed under the new criteria. Its Bitcoin-heavy balance sheet has also raised eligibility questions for Japan’s Metaplanet and other investment-heavy companies.

Strategy disclosed that funds tracking MSCI indexes held about 13 million MSTR shares, or roughly 3.1% of its basic shares outstanding. At Tuesday’s closing price, those shares were worth about $1.57 billion. That is an estimate of their market value, not a confirmed amount of sales. JPMorgan’s $2.8 billion projection was based on an earlier version of MSCI’s proposed rules; additional outflows could follow if other major index providers adopt similar restrictions.

MSTR closed at $121.07 on November 10, down about 16.6% from $145.16 on October 28. Market commentator Adrian Morris said in an November 11 post on X that an official exclusion could bring another decline, but argued much of the risk may already be reflected in the share price. “If | when a de-listing happens, we may see a drop after an official announcement. But likely priced in, not a terminal event,” he wrote.

The stock decline could make future common-stock offerings less attractive as a way to fund Bitcoin purchases, particularly if Strategy’s market valuation approaches the value of its Bitcoin holdings. But index removal would not itself require the company to sell Bitcoin. The direct adjustment would be by funds tracking affected benchmarks, with actual sales depending on their exposure and trading decisions.

Strategy said on November 9 that it had acquired 1,036 BTC, bringing its holdings to 850,364 BTC as of November 8. It also repurchased about $188.3 million of its STRC preferred shares, using proceeds from common-stock sales. The company reported about $4.9 billion in U.S. dollar assets alongside its Bitcoin treasury.