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Bitcoin News Update: MicroStrategy Faces an Identity Dilemma—Is It a Technology Company or a Bitcoin Holding Entity?

Bitcoin News Update: MicroStrategy Faces an Identity Dilemma—Is It a Technology Company or a Bitcoin Holding Entity?

Bitget-RWA2025/11/25 06:12
By:Bitget-RWA

- MicroStrategy faces potential MSCI index reclassification as a Bitcoin investment vehicle, risking $8.8B in passive fund outflows. - The debate centers on whether crypto-heavy firms should be classified as operating businesses or passive funds, impacting capital access and valuation. - CEO Michael Saylor defends MSTR as a "structured finance company," leveraging Bitcoin-backed securities to differentiate from passive vehicles. - Compressed stock-to-NAV multiples and Bitcoin's price slump threaten MSTR's

MicroStrategy (MSTR), a trailblazer in corporate

treasury strategy, is at a critical juncture as leading index providers consider redefining the company as a digital asset investment entity. Inc. is conducting a review, set to finish by January 15, 2026, which may result in the exclusion of companies whose digital assets make up at least half of their total assets, for if other index providers follow suit. The company, which owns 649,870 BTC, , MSCI USA, and MSCI World indices, allowing mainstream investors to gain Bitcoin exposure through their portfolios.

This potential removal is rooted in a fundamental question: Should firms with substantial digital asset reserves be classified as operating businesses or as investment vehicles?

that being dropped from MSCI indices alone could spark $2.8 billion in outflows, with broader market changes possibly raising that to $8.8 billion. Such a move would not only restrict MSTR’s access to passive investment but could also of stocks or bonds.

Bitcoin News Update: MicroStrategy Faces an Identity Dilemma—Is It a Technology Company or a Bitcoin Holding Entity? image 0

Executive Chairman Michael Saylor has strongly defended the company’s classification, stressing that MSTR is “not a fund, not a trust, and not a holding company,” but rather a “publicly traded operating company with a $500 million software business”

. He in Bitcoin-backed digital credit securities—STRK, STRF, STRD, STRC, and STRE—as proof of its ongoing financial innovation. Saylor’s case is built on redefining MSTR as a “Bitcoin-backed structured finance company,” using its business model to set itself apart from passive investment vehicles .

MSTR’s financial approach has relied on the premium between its share price and its net asset value (NAV).

and convertible bonds to acquire more Bitcoin, creating a cycle of “infinite issuance” that benefited shareholders. However, —with prices hovering near $80,000—has narrowed MSTR’s market value to NAV (mNAV) ratio to 1.05, nearly matching its underlying assets. becomes essentially a “wash trade,” undermining the company’s main growth engine.

The third quarter’s results highlighted this instability.

, thanks to a 7% rise in Bitcoin’s price during the quarter, but its stock has since dropped 60% from its recent peak. The disappearance of the premium has left the company’s value closely tied to Bitcoin’s market movements, that being removed from MSCI indices could push mNAV down to 1.0, effectively making MSTR a pure Bitcoin holding company.

The uncertainty around the index decision has already affected MSTR’s liquidity.

fully diluted market capitalization is held by passive index-tracking funds. If excluded, this could , and force MSTR to depend on more expensive debt to maintain its Bitcoin reserves. in debt are on the rise, though management asserts they have 71 years of coverage if Bitcoin’s price remains steady.

Despite these challenges, MSTR continues to expand its Bitcoin holdings. The company

in late November—its largest purchase since July—while by 2027. Saylor’s goal of building a $1 trillion Bitcoin balance sheet to support over-collateralized credit products remains bold, but .

The outcome of the January 15 review will decide whether MSTR can

as both a corporate treasury and a structured finance company, or if it will be forced to reclassify as a closed-end fund, fundamentally changing its capital structure and growth outlook. For now, investors are watching closely, weighing Saylor’s optimistic Bitcoin stance against the practical implications of index-driven capital flows.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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