The worst performer in U.S. stocks on Friday was a “Bitcoin stock.”
MSTR plunged 9.6% at the close to $136.83, with 31.7 million shares changing hands—nearly four times JPMorgan’s volume. By comparison, over the same period $BTC fell only about 1%. It wasn’t Bitcoin that fell; it was the valuation of companies whose identity is “holding Bitcoin.”
The catalyst: On Thursday, MSCI announced new index-screening rules. Companies with large holdings of non-operating investment assets and insufficient operating assets will be treated as fund-like entities and could be removed from its global indexes. Strategy and Japan’s Metaplanet are both on the borderline. The final list of affected companies will be announced on November 11, and the new rules take effect on November 30.
The fallout: JPMorgan estimates that if MSTR is removed, passive funds could face about $2.8 billion in selling pressure. If other index providers follow suit, the total could reach $8.8 billion. For Strategy—which expands by issuing shares to buy Bitcoin and currently holds 848,250 BTC at a total cost of about $64 billion—this directly tests its financing model.
The irony: On the same day, Cantor Fitzgerald raised its MSTR price target from $186 to $208, maintained its Overweight rating, and increased its 12-month Bitcoin price assumption from $98,000 to $112,000. Active and passive investors are assigning completely opposite valuations to this “Bitcoin treasury.”
A new variable in the BTC treasury narrative: When these companies become index constituents, they benefit from passive index buying. But if they are reclassified as fund-like entities, that same money will flow out passively. Crypto’s financialization by traditional finance has appeared for the first time in the form of “exclusion.”
#StrategySharesFall9%OnFriday
#MSTR #BTC
This is not investment advice. DYOR. Trading involves risk.
MSTR plunged 9.6% at the close to $136.83, with 31.7 million shares changing hands—nearly four times JPMorgan’s volume. By comparison, over the same period $BTC fell only about 1%. It wasn’t Bitcoin that fell; it was the valuation of companies whose identity is “holding Bitcoin.”
The catalyst: On Thursday, MSCI announced new index-screening rules. Companies with large holdings of non-operating investment assets and insufficient operating assets will be treated as fund-like entities and could be removed from its global indexes. Strategy and Japan’s Metaplanet are both on the borderline. The final list of affected companies will be announced on November 11, and the new rules take effect on November 30.
The fallout: JPMorgan estimates that if MSTR is removed, passive funds could face about $2.8 billion in selling pressure. If other index providers follow suit, the total could reach $8.8 billion. For Strategy—which expands by issuing shares to buy Bitcoin and currently holds 848,250 BTC at a total cost of about $64 billion—this directly tests its financing model.
The irony: On the same day, Cantor Fitzgerald raised its MSTR price target from $186 to $208, maintained its Overweight rating, and increased its 12-month Bitcoin price assumption from $98,000 to $112,000. Active and passive investors are assigning completely opposite valuations to this “Bitcoin treasury.”
A new variable in the BTC treasury narrative: When these companies become index constituents, they benefit from passive index buying. But if they are reclassified as fund-like entities, that same money will flow out passively. Crypto’s financialization by traditional finance has appeared for the first time in the form of “exclusion.”
#StrategySharesFall9%OnFriday
#MSTR #BTC
This is not investment advice. DYOR. Trading involves risk.