MSCI Removes Strategy (MSTR) from Indexes, Triggering Share Drop and Bitcoin Concerns

MSCI said it will remove Strategy (MSTR), the largest corporate Bitcoin holder, from its MSCI USA and MSCI World indexes, effective after the close on November 30, because it decided Strategy and other removed companies, including Metaplanet and Yellow Cake, more closely resemble investment funds. The deletion removes Strategy's Class A shares from the MSCI USA Large Cap Index. It is not a Nasdaq delisting, and Strategy is not required to sell any Bitcoin.

Strategy had warned that an exclusion would result in $2.8 billion of its stock being liquidated, and J.P. Morgan had estimated outflows of up to $8.8 billion if other index providers follow MSCI, according to Reuters. Strategy argued in its consultation response that MSCI-linked funds held about 13 million shares, or 3.1% of basic shares outstanding, less than one day's trading volume.

Shares fell 2.4% in extended trading on Wednesday and more than 4% in premarket trading on Thursday, per Investing.com; the stock is down about 20% this year. Bitcoin was down 0.7% at $73,507 as of 05:34 ET on Thursday, but the same report also cited hot U.S. inflation data and crypto regulation worries. Markus Thielen of 10x Research said he does not expect any spillover into Bitcoin itself.

What to watch: whether other index providers follow MSCI, and whether weaker share demand slows Strategy's capital raising, which was $21.23 billion year to date as of October 25.