"Cowen called the potential removal "capricious" but emphasized that investors should prepare for sustained selling pressure. The analysts note that Strategy is not a fund, trust, or holding company. Instead, it is a public operating company. Its $500 million software business generates all of its revenue. Meanwhile, its Bitcoin treasury operations are innovative and active, offering unique Bitcoin-backed securities. "Removing Strategy from broad indexes simply because of its Bitcoin focus feels arbitrary," the analysts wrote."
"MSCI has cited concerns that PBTCs may resemble investment funds, which are ineligible for index inclusion. Cowen counters that Strategy's structure is clearly different. The stakes are high. JPMorgan recently warned that excluding Strategy from MSCI could trigger $2.8 billion in passive outflows. If other indexes follow, the total could reach $8.8 billion. Strategy's market cap currently sits near $59 billion, with roughly $9 billion held in passive index-tracking vehicles."
Strategy is at risk of removal from all MSCI indexes, with a formal decision expected around mid-January, potentially triggering sustained selling pressure. Cowen argues the potential exclusion is capricious because Strategy is a public operating company with a $500 million software business that generates all revenue, alongside active Bitcoin treasury operations offering Bitcoin-backed securities. MSCI has raised concerns that PBTCs may resemble investment funds and thus be ineligible, while JPMorgan warns that exclusion could cause $2.8 billion to $8.8 billion in passive outflows. Strategy's market valuation and mNAV have declined sharply amid this uncertainty.
Read at Bitcoin Magazine
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