Michael Saylor’s Strategy could soon be removed from MSCI benchmarks and potentially other major stock indexes, a move analysts warn could erase up to $9 billion in demand for its shares and weigh on the broader digital asset treasury (DAT) sector.
MSCI proposed changes in October, following client inquiries, that would exclude companies whose digital asset holdings account for 50% or more of total assets from its global indexes. The index provider argues such firms resemble investment funds, which it does not include. Affected companies counter that they are operating businesses building new products and say the proposal unfairly targets crypto-focused firms.
Strategy—formerly software firm MicroStrategy—saw its shares surge nearly 3,000% after it began accumulating bitcoin in 2020. Since then, the stock has fallen sharply and is down about 43% this year amid a broader cryptocurrency slump.
Inspired by Strategy’s approach, dozens of companies have added crypto tokens to their balance sheets in hopes of capital appreciation. However, questions are growing about the long-term sustainability of these models, especially as prices fluctuate.
MSCI is conducting a public consultation and plans to announce a decision by January 15. Analysts say that if MSCI excludes DAT companies, other index providers could follow. Kaasha Saini, head of index strategy at Jefferies, told Reuters that the debate now extends beyond MSCI to the eligibility of DATs in equity indexes more broadly, and she expects many benchmarks to align with MSCI’s stance.
Exclusion risk could chill the sector
Passive asset managers are estimated to hold up to 30% of a large-cap company’s free float, meaning index exclusion could trigger significant outflows. This poses a particular risk for DAT companies, which often fund token purchases by issuing equity.
Strategy did not comment on the proposal, and Saylor has publicly downplayed the impact of a potential MSCI exclusion. However, in a subsequent letter to MSCI, Saylor and Strategy CEO Phong Le estimated that exclusion could lead to $2.8 billion in forced selling of Strategy shares and “chill” the industry. They warned the change would effectively shut DATs out of the $15 trillion passive investment universe, weakening their competitive position.
Analysts at TD Cowen estimate that about $2.5 billion of Strategy’s market value is tied to MSCI inclusion, with another $5.5 billion linked to other indexes. JPMorgan estimates potential outflows of $2.8 billion if MSCI removes Strategy, rising to $8.8 billion if other indexes follow, including the Nasdaq 100, CRSP US Total Market Index, and Russell Indexes owned by LSEG.
Strategy’s market capitalization stood at around $45 billion recently. Nasdaq declined to comment but retained Strategy in the Nasdaq 100 during its latest annual rebalance. CRSP also declined to comment, while LSEG said it continuously reviews client feedback and follows established governance processes.
Digital asset treasury boom under scrutiny
As of September, at least 200 DAT companies collectively had a market capitalization of about $150 billion, more than triple the level a year earlier, according to DLA Piper. As crypto prices have fallen, however, some firms have traded below the net asset value of their token holdings.
MSCI’s preliminary list identifies 38 companies at risk of exclusion, with a combined market value of $46.7 billion as of September 30. These include French bitcoin buyer Capital B. Capital B’s bitcoin strategy director Alexandre Laizet said passive ownership is currently limited but remains important for future adoption and access to capital.
Matt Cole, CEO of U.S. bitcoin buyer Strive, said much of the impact has already been priced in by markets. Over the longer term, he added, the proposed changes are likely to raise the cost of capital for bitcoin treasury companies.
