MSCI kicked Strategy out of its index, but what really got knocked out wasn’t the 850,000 coins it holds—not a single one will be forced onto the market.
What got knocked out was the money-printing machine of “issuing stock to buy coins.”
On November 11, MSCI confirmed that after the market close on November 30, it would remove Strategy from the MSCI USA/World/ACWI indexes. Index funds will have to sell about 13 million shares (3.1% of the float), which JPMorgan estimates at around $2.8 billion. If Nasdaq follows suit, the total could reach $8.8 billion.
BTC is currently around $65,500, and has closed below Strategy’s average cost of $75,500 for several days in a row. Its 850,000-coin holdings are sitting on about $8.4 billion in unrealized losses.
MSTR closed Friday at $111.62, down 13.67% over five days and 26.22% over the past month. The company’s market cap is $51.68 billion, already below the roughly $55.7 billion value of the coins it holds—the stock is cheaper than the value of its coins on the books.
My take: when the stock trades below the value of its coins, issuing new shares to buy more coins just means losing more with every purchase. Strategy’s biggest strength in this bull market—issuing stock at a premium to acquire coins—has stalled. As recently as November 2–8, it bought 1,036 coins at an average price of $79,000. It hasn’t sold a single coin this week, but whether it can keep buying next week depends on whether the premium returns.
The real risk isn’t the $2.8 billion in forced selling on November 30 (Strategy itself says that’s less than a day’s trading volume). It’s that if the index world classifies “companies that hoard coins” as non-operating companies, this financing channel will systematically narrow.
Watch three variables next: forced selling at the November 30 close, whether Nasdaq launches a similar consultation, and whether MSTR’s discount to the value of its coins narrows. If the discount doesn’t narrow, Strategy will likely first slow its weekly coin purchases, or even stop them altogether.
Do you think Strategy will be completely “expelled” from the index world, or could a rebound in the coin price to its $75,000 cost basis restore its premium?
$BTC
#比特币 #MSCI #Strategy
The above is for market information only and does not constitute investment advice.
What got knocked out was the money-printing machine of “issuing stock to buy coins.”
On November 11, MSCI confirmed that after the market close on November 30, it would remove Strategy from the MSCI USA/World/ACWI indexes. Index funds will have to sell about 13 million shares (3.1% of the float), which JPMorgan estimates at around $2.8 billion. If Nasdaq follows suit, the total could reach $8.8 billion.
BTC is currently around $65,500, and has closed below Strategy’s average cost of $75,500 for several days in a row. Its 850,000-coin holdings are sitting on about $8.4 billion in unrealized losses.
MSTR closed Friday at $111.62, down 13.67% over five days and 26.22% over the past month. The company’s market cap is $51.68 billion, already below the roughly $55.7 billion value of the coins it holds—the stock is cheaper than the value of its coins on the books.
My take: when the stock trades below the value of its coins, issuing new shares to buy more coins just means losing more with every purchase. Strategy’s biggest strength in this bull market—issuing stock at a premium to acquire coins—has stalled. As recently as November 2–8, it bought 1,036 coins at an average price of $79,000. It hasn’t sold a single coin this week, but whether it can keep buying next week depends on whether the premium returns.
The real risk isn’t the $2.8 billion in forced selling on November 30 (Strategy itself says that’s less than a day’s trading volume). It’s that if the index world classifies “companies that hoard coins” as non-operating companies, this financing channel will systematically narrow.
Watch three variables next: forced selling at the November 30 close, whether Nasdaq launches a similar consultation, and whether MSTR’s discount to the value of its coins narrows. If the discount doesn’t narrow, Strategy will likely first slow its weekly coin purchases, or even stop them altogether.
Do you think Strategy will be completely “expelled” from the index world, or could a rebound in the coin price to its $75,000 cost basis restore its premium?
$BTC
#比特币 #MSCI #Strategy
The above is for market information only and does not constitute investment advice.