The Bitcoin treasury company Strategy (MSTR) awaits the results of MSCI's November index review, which could remove it from its indices. JPMorgan analysts previously estimated the exclusion could force billions of dollars in passive selling.
Strategy (MSTR) is facing a major institutional test as MSCI prepares to release the results of its November index review. A potential removal puts billions of dollars in passive investment outflows at stake for the Bitcoin treasury company.
JPMorgan puts the outflows at billions
JPMorgan analysts previously estimated that funds tracking MSCI indices could be forced to sell around $2.8 billion worth of MSTR shares if the stock is excluded. If other major index providers follow the same move, total outflows could reach $8.8 billion.
The index changes are scheduled to take effect at the November 30 close.
Strategy pushes back on MSCI's rules
Strategy pushed back against MSCI's proposal, arguing that the rules effectively target digital asset treasury companies under a different name. The company also challenged MSCI's classification of certain firms as non-operating businesses, saying the definition has no basis in US GAAP, IFRS, or any recognized legal framework.
The company has maintained that its Bitcoin operations qualify as an operating segment under US accounting rules, consistent with its discussions with SEC staff. It also warned that the proposal introduces subjective policy decisions into index construction and could undermine the neutrality investors expect from index providers. The company has asked MSCI to withdraw the proposal.
Trader says risk may already be priced in
Market commentator KALEO believes Strategy could be among the companies removed, but the threat may already be priced in. He said MSCI finalized its new eligibility rules on October 15, and Bitcoin has steadily declined since then.
Concerns remain about whether Strategy could eventually face cash constraints and be forced to sell some of its BTC holdings to meet financial obligations. However, the trader believes that scenario is far less likely than it appeared during the summer, because Strategy has shown a willingness to dilute common shareholders and adjust its financial metrics to raise capital rather than sell Bitcoin.
He expects that approach to continue.
Source: CryptoPotato
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