MSCI Officially Removes Strategy: Up to $2.8 Billion in Passive Selling Pressure Looms, 850,000 BTC Accumulation Flywheel Under Pressure

Author: TechFlow

On November 12, MSCI officially released the MSCI November Index Review List, adding Strategy (MSTR) Class A shares to the exclusion list for the MSCI US Index. This adjustment is based on price cutoff data as of October 20 and will take effect after market close on November 30.

During the previous day's US stock premarket, investors continued to monitor institutional estimates of up to $2.8 billion in potential passive selling pressure. Following the public release of final review filings after the Eastern US market closed on November 11, Strategy was simultaneously removed from both the MSCI Global and ACWI indices, formally initiating a countdown to complete liquidation for the nearly one-year assessment period.

New Non-Operating Entity Rules Take Effect; All Five Companies Excluded

The publicly released list indicates that while the MSCI US Index added only one new constituent, Moderna, it simultaneously excluded 24 tickers, with Strategy prominently among them. This decision follows the finalized MSCI Non-Operating Entity Guidelines implemented on October 15.

Under the new procedural guidelines, issuers lacking substantive operating assets must be screened against five financial ratios, losing index eligibility if they trigger four or more criteria. Existing constituents that fail to pass for two consecutive annual reporting periods are removed, and the five reserve companies previously placed under observation have all been eliminated in the final review.

In addition to Strategy, Japan's Metaplanet was removed from the Japan Small Cap Index, UK-based uranium reserve holder Yellow Cake was removed from the UK Small Cap Index, and Icelandic firm Skel and US-based Upexi were also dropped from their respective indices. Strategy alone accounted for over 90% of the combined affected market capitalization.

After-Market Slight Dip Sets Tone; Comparison of Dual Passive Selling Pressure Estimates

Market reaction in the secondary market remained relatively restrained on the evening the decision was announced. According to market data, MSTR closed the regular session up 1.06% at $122.35 on November 11. Following the publication of the official list, after-hours trading dipped 1.51% to $120.50.

Regarding fund outflow estimates, JPMorgan previously calculated that the exclusion would generate approximately $2.8 billion in passive selling pressure. Meanwhile, Strategy disclosed that passive funds tracking the MSCI index hold roughly 13 million shares, representing about 3.1% of the basic floating shares. Based on the $122.35 closing price, this stake is valued at approximately $1.59 billion.

Stock Price Enters Discount Period Without Touching Spot Bitcoin Holdings

This forced liquidation coincides with a shift in the company's valuation logic. According to a premium analysis by Disruption Banking, as of November 8, Strategy held 850,364 Bitcoin at a total cost of $64.16 billion, with an average acquisition price of $75,456 per coin.

Following recent corrections, MSTR's share price has now traded at a discount to its Bitcoin net asset value. The previous financing flywheel, which relied on high premiums from equity offerings to purchase Bitcoin, has already faced significant headwinds. The concentrated release of passive selling pressure will further constrain future equity refinancing opportunities.

In response to the outcome, Strategy Executive Chairman Michael Saylor and CEO Phong Le had previously criticized the new rules as discriminatory. Meanwhile, Metaplanet CEO Simon Gerovich stated that the adjustment would not alter the company's Bitcoin accumulation strategy.

Mechanically, removal from the index only compels passive equity funds to reduce their MSTR holdings and does not require the company to sell its spot Bitcoin positions. Between now and the effective date at market close on November 30, index funds must complete their portfolio rebalancing. Consequently, MSTR will need to absorb this wave of selling pressure during the current discount period.