Bitcoin Updates: MSCI's Uncertainty in Classifying Bitcoin Puts MSTR's $59 Billion Worth at Risk

Michael Saylor's

Inc. (MSTR) is under increasing scrutiny as leading index providers weigh the possibility of removing the company from major benchmarks. Such a move could spark billions in withdrawals and threaten its Bitcoin-centric, leveraged business model. According to JPMorgan analysts, if moves forward with its plan to exclude firms holding more than half their assets in digital currencies, in passive investment outflows just from the MSCI USA and Nasdaq 100 indices, with further risks if other index providers follow. The decision, , comes as the company’s stock has tumbled over 60% since its November 2024 high, erasing the premium that once attracted crypto-focused investors.

The move to exclude Strategy is rooted in an ongoing debate about whether companies like it, which primarily hold

as their main asset, should be treated as operating businesses or as investment entities. In an October consultation, MSCI that digital asset-heavy treasuries resemble closed-end funds, which are generally left out of equity indices. Strategy’s market capitalization, now at $59 billion, is on shaky ground: its multiple of net asset value (mNAV) has dropped to 1.1— —as Bitcoin’s value has slid more than 30% from its October peak.

Even amid market volatility, Saylor has continued to rapidly increase the company’s Bitcoin reserves. In November alone, Strategy purchased $1.5 billion worth of Bitcoin, raising its total holdings to 640,808 BTC as of November 17,

. These acquisitions are financed through equity and convertible bond sales, which have expanded the company’s share count from 160 million to 286 million over the past year. This dilution, , has shaken investor trust, with yields on its 10.5% notes rising to 11.5% and euro-denominated preferred shares trading below their reduced offering price.

The risks go beyond just index-related outflows. that exclusion could set off a negative cycle: lower liquidity, higher funding costs, and reputational harm that further diminish the stock’s attractiveness to institutional investors. Historically, being part of major indices has funneled billions into Strategy’s shares, but this model now looks vulnerable as Bitcoin’s rally stalls and the crypto market has shed over $1 trillion in value so far this year, .

Saylor, nevertheless, remains optimistic. In a recent interview, he shared an ambitious plan to amass a $1 trillion Bitcoin balance sheet,

to develop over-collateralized credit products and transform global finance. However, with the company’s mNAV nearing one and lacking any hedging, its future is tied to a Bitcoin recovery—a prospect .

As the January deadline nears, Strategy’s situation highlights the fragile nature of index inclusion in today’s markets. What once amplified Saylor’s story now threatens to unravel it,

that relies more on market reflexivity than on conventional revenue sources.