I've always felt that MicroStrategy (Strategy) $MSTR is a rather uncanny beast. The market has nearly written it off several times, but each time it managed to pull through.
When BTC crashed in 2022, the BTC held by MicroStrategy was deep in the red, and many people worried that its collateralized loans would trigger margin calls, eventually forcing it to sell its coins.
I remember it selling off holdings several times along the way, and each time it managed to defuse the crisis.
MicroStrategy made it through the bear market, wobbling but still standing. Later, when BTC surged, it once again used its financing-and-accumulation strategy to great effect.
But this time, it may be kicked out of MSCI's indexes—potentially one of the biggest crises it has ever faced.
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MSCI is one of the world's most influential index providers. A huge number of funds around the globe track its indexes, so its decisions can directly affect the flow of massive amounts of institutional capital.
This time, MSCI has decided to exclude from some indexes companies that lack sufficient operating businesses and primarily exist to hold assets.
A company like MicroStrategy, which raises capital to accumulate BTC, is right on the potential removal list.
If it is actually removed, it would be like having the rug pulled out from under MicroStrategy.
Passive funds that track the relevant indexes would have to sell MSTR, potentially creating an estimated $2.8 billion in selling pressure.
MicroStrategy's flywheel has always started with raising capital in the markets to buy $BTC .
If its share price comes under pressure and its valuation premium falls, it could become harder and more expensive for the company to raise capital in the future, affecting its ability to continue accumulating BTC on a large scale.
That could undermine the financing model on which MicroStrategy depends for survival.
Raise capital to buy BTC; BTC reserves grow, the market assigns a valuation premium, and then it raises more capital to buy BTC.
This virtuous cycle turned MicroStrategy from a software company into the world's largest publicly listed BTC treasury company.
The list hasn't been announced yet. MSCI will publish the final list on November 11, with removals officially taking effect on November 30. Let's see what the future holds for MicroStrategy.
When BTC crashed in 2022, the BTC held by MicroStrategy was deep in the red, and many people worried that its collateralized loans would trigger margin calls, eventually forcing it to sell its coins.
I remember it selling off holdings several times along the way, and each time it managed to defuse the crisis.
MicroStrategy made it through the bear market, wobbling but still standing. Later, when BTC surged, it once again used its financing-and-accumulation strategy to great effect.
But this time, it may be kicked out of MSCI's indexes—potentially one of the biggest crises it has ever faced.
━━━━━━━━━━━━━━━━━━━━
MSCI is one of the world's most influential index providers. A huge number of funds around the globe track its indexes, so its decisions can directly affect the flow of massive amounts of institutional capital.
This time, MSCI has decided to exclude from some indexes companies that lack sufficient operating businesses and primarily exist to hold assets.
A company like MicroStrategy, which raises capital to accumulate BTC, is right on the potential removal list.
If it is actually removed, it would be like having the rug pulled out from under MicroStrategy.
Passive funds that track the relevant indexes would have to sell MSTR, potentially creating an estimated $2.8 billion in selling pressure.
MicroStrategy's flywheel has always started with raising capital in the markets to buy $BTC .
If its share price comes under pressure and its valuation premium falls, it could become harder and more expensive for the company to raise capital in the future, affecting its ability to continue accumulating BTC on a large scale.
That could undermine the financing model on which MicroStrategy depends for survival.
Raise capital to buy BTC; BTC reserves grow, the market assigns a valuation premium, and then it raises more capital to buy BTC.
This virtuous cycle turned MicroStrategy from a software company into the world's largest publicly listed BTC treasury company.
The list hasn't been announced yet. MSCI will publish the final list on November 11, with removals officially taking effect on November 30. Let's see what the future holds for MicroStrategy.