Countdown! MSCI to announce final list; Strategy could face billions of dollars in passive selling!
MSCI is expected to announce its final decision after 6 a.m. Beijing time on November 12.
Strategy (MSTR), the world’s largest corporate holder of Bitcoin, is facing a major test that could reshape its standing in the capital markets.
MSCI has decided to adopt a new methodology for screening out non-operating companies that do not meet the requirements of its Global Investable Market Indexes. Strategy was previously included on the preliminary list of potential removals.
If Strategy is ultimately removed, it could trigger a series of knock-on effects:
1. Concentrated selling by passive funds: Funds tracking the relevant indexes may be forced to adjust their holdings. The potential selling is estimated by the market at approximately $1.57 billion to $2.8 billion.
2. Pressure on its equity premium: Strategy’s core financing model depends on its stock trading at a premium to the net asset value of its Bitcoin holdings. Index removal could further compress this premium.
3. Reduced ability to accumulate BTC: If its ability to raise equity capital is affected, the company may also become less able to raise funds by issuing shares and continue buying Bitcoin.
MSCI is expected to announce its final decision after 6 a.m. Beijing time on November 12.
Strategy (MSTR), the world’s largest corporate holder of Bitcoin, is facing a major test that could reshape its standing in the capital markets.
MSCI has decided to adopt a new methodology for screening out non-operating companies that do not meet the requirements of its Global Investable Market Indexes. Strategy was previously included on the preliminary list of potential removals.
If Strategy is ultimately removed, it could trigger a series of knock-on effects:
1. Concentrated selling by passive funds: Funds tracking the relevant indexes may be forced to adjust their holdings. The potential selling is estimated by the market at approximately $1.57 billion to $2.8 billion.
2. Pressure on its equity premium: Strategy’s core financing model depends on its stock trading at a premium to the net asset value of its Bitcoin holdings. Index removal could further compress this premium.
3. Reduced ability to accumulate BTC: If its ability to raise equity capital is affected, the company may also become less able to raise funds by issuing shares and continue buying Bitcoin.
