Strategy (formerly MicroStrategy), the world’s largest corporate Bitcoin holder, is lobbying index provider MSCI against a crucial decision to exclude an index, which must take place no later than January 15.
For context, MSCI is considering removing companies whose business models revolve around buying cryptocurrencies, citing concerns that they function as ineligible investment funds.
This high-stakes involvement by Chairman Michael Saylor is therefore more than a simple lobbying effort with companies.
How will MSCI impact Saylor’s strategy?
If MSCI moves forward, it will set an important precedent for how passive investment capital views “Bitcoin Treasury” companies, forcing a critical reevaluation of any publicly traded company using the Saylor playbook and signaling a new regulatory hurdle for corporate crypto exposure.
The strategy’s position in major indices such as MSCI USA and MSCI World has been crucial to its capital raising model, which ensures stable demand from passive ETFs.
These inflows have long allowed MSTR to trade at a premium to its Bitcoin [BTC] holding companies, allowing the company to issue equity and debt with minimal dilution.
However, that premium is now rapidly eroding. Especially now that the MSTR is down over 37% this year, while Bitcoin has barely moved.
Therefore, investor confidence in the leveraged stock-for-Bitcoin strategy is weakening just as a new risk emerges. Potential exclusions from indexes could trigger forced selling and increase pressure on Bitcoin-heavy public companies.
JP Morgan is also concerned about the Strategy
In fact, JPMorgan estimates that Strategy’s removal from the MSCI indices could lead to a forced outflow of $2.8 billion, possibly $8.8 billion, if other index providers follow suit.
This mechanical sale would be a major blow to MSTR’s valuation and liquidity.
And yet Saylor has downplayed the threat. He has argued that Strategy is a software company that uses Bitcoin as “productive capital,” not as a crypto fund.
Saylor said:
“It won’t make any difference in my opinion.”
However, JPMorgan has warned that exclusion would seriously damage investor confidence and hinder the company’s ability to raise future equity or debt.
In a vote of confidence, Saylor told Reuters:
“Equity will be volatile because the company is built on fortified bitcoin. If bitcoin falls 30%, 40%, equity will fall even more because equity is built to fall.”
Why is Strategy the largest Bitcoin company holder?
Despite a turbulent week, Strategy has shown why it is still Bitcoin’s strongest business player. The sell-off, driven by exaggerated rumors about wallet tracking, exposed the market’s fragility, not the company’s own weakness.
With just 1.11x leverage, Strategy can withstand a 95% BTC crash, giving Saylor the confidence to ignore the panic and keep buying.
However, the consequences extend beyond one company.
The rise of Strategy inspired copycat companies that lack liquidity and debt structure. Therefore, the recession is now exposing these weaknesses, increasing the risk of forced selling, which could intensify Bitcoin’s downturn.
At the same time, regulators are also tightening their grip.
The strategy’s stock price and Bitcoin price action
In the meantime, the numbers speak for themselves.
Even after the violent shakeout, BTC remained bounced back to $93,057, while shares of MSTR climbed to $181.33 – A sign that markets still reward clarity over rumor.
Even behind the scenes, Strategy continues to accumulate, rebalance the holdings, and maintain the 438,000 BTC pile, adding hundreds more coins week after week.
Final thoughts
- The decades-long advantage of the passive inflow strategy is now in jeopardy, putting at risk the premium that once powered the engine of capital acquisition.
- Copycat firms may face the most severe consequences as they lack Strategy’s leverage controls, liquidity depth and investor confidence.