Strategy Faces MSCI Index Removal Risk: What to Watch Before November 11

Author: Kyle Pare (DL News)

Compiled by Shenchao TechFlow

Shenchao TechFlow Editor's Note:As the world's largest publicly listed Bitcoin-holding company, Strategy has built a Wall Street capital story by issuing equity and convertible bonds to lever up and accumulate Bitcoin at scale. However, this 'Bitcoin treasury' model, which is highly dependent on passive inflows from the stock market, is now facing intense scrutiny from traditional index providers.

MSCI, a leading global index provider, is scheduled to publish its latest constituent screening results on November 11. Under the new rules effective October 15, shell-like investment vehicles lacking substantive operating assets may face removal. JPMorgan previously estimated that removal from MSCI indexes could trigger up to $2.8 billion of passive selling in Strategy shares; if other index providers follow suit, total selling could rise to $8.8 billion.

Although Michael Saylor has downplayed the potential impact and called it a 'biased value judgment,' after being excluded from the S&P 500, MSCI's decision will not only affect billions of dollars in short-term liquidity pressure but also directly test whether digital asset treasury companies can sustain long-term viability in traditional financial benchmark markets.

Strategy investors face a key decision on November 11, when it will be determined whether the company, positioned as a 'Bitcoin treasury,' can remain in MSCI global equity indexes. Any resulting constituent removal will take effect after the U.S. market close on November 30.

MSCI formally adopted its latest constituent eligibility rules on October 15. It remains undecided whether Strategy will ultimately be removed.

However, for shareholders, the core concern is how severely index removal would affect market demand for the stock and the company's future refinancing channels.

On October 28, Strategy said preliminary voting results showed shareholders had approved charter amendments allowing daily dividend payments on four series of preferred stock.

Once the amended provisions are formally filed and become effective, the new dividend payment mechanism will first apply to STRC on November 1, and will phase in across STRF, STRK, and STRD by January 1, 2027.

To be clear, the shareholder vote only changed the preferred stock dividend arrangements and cannot influence MSCI's upcoming decision on index inclusion or exclusion.

How MSCI's New Rules Work

Under the new assessment framework, MSCI first examines whether a company has substantive operating assets. Companies that fail this initial screen face five strict financial ratio tests; failing at least four triggers disqualification from inclusion.

For existing index constituents, formal removal applies only if the company fails the screen in annual financial reporting periods for the two most recent consecutive fiscal years. MSCI may also take the latest interim financial reports into consideration.

According to TradingView, MSCI had previously classified Strategy, Metaplanet, and Upexi as potential removal candidates under its methodology for non-operating companies.

In addition, Sharplink, Ton Strategy Company, Solana Company, and DeFi Development Corp. have been placed on a watchlist for possible removal.

Why Index Removal Matters for Strategy

A potential removal decision could create significant financial volatility for Bitcoin itself and for companies like Strategy.

According to Bloomberg, JPMorgan estimated in 2025 that removal from MSCI indexes could trigger up to $2.8 billion of concentrated passive selling in Strategy shares.

It should be clarified that these estimates relate to passive selling pressure from secondary-market investors in Strategy shares; index removal itself would not force Strategy to sell its Bitcoin reserves directly.

But Bloomberg further reported that if other major index providers follow suit with similar removal measures, the total potential selling could surge to $8.8 billion.

For publicly listed companies, inclusion in major indices is a key pillar for sustaining demand for their shares. Passive index funds that track benchmark indices must buy index constituents according to their weights and passively liquidate holdings when a company is removed.

As a result, if Strategy is removed, all passive funds tracking the relevant MSCI Global Investable Market Indexes will be forced to adjust their portfolio positions.

Brian Dobson, director of disruptive technology research at financial services firm Clear Street, told Bloomberg that index inclusion is critical for companies like Strategy because it generates continuous buying demand, including weekly 401(k) retirement contributions from millions of ordinary investors and passive allocations from various mutual funds.

He added that once a company is removed from an index, the forced selling by investors and funds tracking that index would impose extremely heavy short-term selling pressure on the share price within a short period.

This knock-on impact is not limited to Strategy alone. Metaplanet, a Tokyo-headquartered publicly listed company pursuing a similar Bitcoin treasury strategy, could also be affected.

Financing Lifeline for Bitcoin Purchases

More importantly, losing index constituent status would also have a profound impact on the company's future capital-raising capability.

The huge amounts of capital Strategy needs to purchase Bitcoin are typically raised through additional common stock issuances, preferred stock issuances, convertible bond offerings and other diversified financial instruments, with representative preferred stock series including STRC and STRK.

Crypto analytics firm ZEROBASE emphasized in a post on X that passive investment flows have long been a key pillar supporting buying demand for Bitcoin treasury concept stocks.

If other index providers later also close the door to companies whose core business is accumulating Bitcoin, the negative domino effect of MSCI's removal could bring extremely severe downstream knock-on impacts to companies such as Strategy.

According to Bloomberg, Strategy has already felt weak demand on the issuance side for some securities. Last year, when the company was not selected for inclusion in the S&P 500 index, it already suffered a similar sharp setback in confidence.

In its early development stage, Chairman Michael Saylor successfully drove the company's asset expansion by issuing common stock at a premium (i.e., the share price was significantly above the net asset value of its crypto holdings).

However, as market concerns over equity dilution risk intensified, the stock premium subsequently narrowed sharply, forcing the company to shift its financing focus to preferred stock.

However, Bloomberg disclosed that market appetite for subscribing to these preferred securities is also gradually waning.

Alexander Blume, CEO of Two Prime, a Bitcoin asset management firm, told Bloomberg that for Strategy it is becoming increasingly difficult to continue selling equity to sustain the financing flywheel that keeps buying more Bitcoin.

Blume bluntly pointed out that digital-asset treasury companies are often not regarded as true operating businesses from a traditional finance perspective, so he is not at all surprised by some major index providers' decision not to expose their clients to such extreme volatility.

Where Will the Situation Go From Here?

MSCI is expected to officially publish the specific list of companies affected by the new classification rules on November 11, and the final index adjustments are scheduled to take effect on November 30, 2026.

Strategy's removal has not yet been finalized, and the actual depth of the financial impact will depend entirely on the final classification outcome and the actual rebalancing actions of passive investors tracking the indices.

Amid mounting external concerns, Saylor himself has been strongly downplaying the potential impact of such a removal.

In an exclusive Bloomberg Television interview in October, Saylor claimed that the amount of capital actually controlled and allocated by MSCI was 'de minimis', and accused the firm of 'imposing biased values on digital assets'.

According to Bloomberg, he also characterized the potential resolution as a "value judgment" that set a dangerous precedent.

The announcement set to be revealed in November will provide clearer guidance to the market, fully clarifying whether Strategy and other Bitcoin treasury companies will be removed from widely tracked global equity benchmark indices, and what profound impact this may have on their ability to continue accumulating and hoarding Bitcoin in the future.

If you have relevant industry tips, please contact the author, Kyle Pare, via email at kyle@dlnews.com.

Source: TechFlow