MSCI Drops Strategy From Global Indexes, Putting $1.6B in Passive Demand at Risk

MSCI confirmed that Strategy will be removed from its global equity indexes after the market closes on November 30 under a new eligibility screen for non-operating companies. Funds tracking the affected indexes are estimated to hold about 13 million Strategy shares, equal to roughly 3.1% of shares outstanding and worth approximately $1.6 billion at recent prices. JPMorgan previously estimated that potential outflows could reach $2.8 billion, although that forecast was based on an earlier version of MSCI’s proposal. Strategy holds 850,364 BTC worth about $62.6 billion, and the exclusion does not delist its stock or require it to sell bitcoin. The larger concern is that weaker passive demand could compress the company’s market-value premium, reducing the effectiveness of issuing new shares to finance additional bitcoin purchases.