MicroStrategy (MSTR), a trailblazer in corporate
Bitcoin
treasury strategy, is at a critical juncture as leading index providers consider redefining the company as a digital asset investment entity.
MSCI
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,
potentially leading to as much as $8.8 billion in outflows from passive funds
for
MSTR
if other index providers follow suit. The company, which owns 649,870 BTC,
has long reaped the benefits of being part of the Nasdaq 100
, 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?
Analysts at JPMorgan caution
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
harm its standing as a credible issuer
of stocks or bonds.
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”
as he stated in a recent interview
. He
pointed to the company’s $7.7 billion notional value
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
as the company continues to assert its position
.
MSTR’s financial approach has relied on the premium between its share price and its net asset value (NAV).
This difference enabled the company to raise capital through equity
and convertible bonds to acquire more Bitcoin, creating a cycle of “infinite issuance” that benefited shareholders. However,
Bitcoin’s recent decline
—with prices hovering near $80,000—has narrowed MSTR’s market value to NAV (mNAV) ratio to 1.05, nearly matching its underlying assets.
At this point, issuing new shares to buy Bitcoin
becomes essentially a “wash trade,” undermining the company’s main growth engine.
The third quarter’s results highlighted this instability.
MSTR posted $2.8 billion in net profit
, 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,
with JPMorgan analysts cautioning
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.
More than $9 billion of its $57 billion
fully diluted market capitalization is held by passive index-tracking funds. If excluded, this could
increase funding costs, reduce trading activity
, and force MSTR to depend on more expensive debt to maintain its Bitcoin reserves.
Annual payments on its $700 million
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
acquired 8,178 BTC in a single day
in late November—its largest purchase since July—while
investment bank TD Cowen forecasts holdings could reach 815,000 BTC
by 2027. Saylor’s goal of building a $1 trillion Bitcoin balance sheet to support over-collateralized credit products remains bold, but
the future hinges on how the index classification issue is resolved
.
The outcome of the January 15 review will decide whether MSTR can
maintain its dual identity
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.
