MSCI Spares Strategy—for Now—but Clips Its Bitcoin Buying Wings

Equity index heavyweight MSCI delivered a mixed verdict for Strategy and other digital asset treasury firms this week. While the companies will remain in MSCI’s widely followed global indices for now, a new rule quietly reshapes the playing field—one that could significantly restrict Strategy’s ability to buy more bitcoin using equity issuance.

The decision sparked an initial rally in Strategy’s stock, but the celebration was short-lived. Beneath the surface, MSCI’s move signals growing discomfort with companies whose primary economic engine looks less like an operating business and more like a crypto investment vehicle.

MSCI said it will no longer count newly issued shares when calculating index weightings for Strategy and similar firms. That means even if Strategy issues more stock to buy bitcoin, its representation in MSCI indices such as MSCI World and MSCI USA will not increase.

Those indices matter. Roughly $2 trillion in ETF assets are benchmarked to MSCI products, making index inclusion a powerful source of liquidity and passive demand. For Strategy, that demand has helped absorb the issuance of 67 million shares since late 2024, expanding its public float by 27%.

Had MSCI allowed those shares to boost index weightings, Strategy could theoretically have leaned on passive inflows to fund an enormous bitcoin buying campaign. That path has now been at least partially closed.

While headlines framed the decision as a win for Strategy, MSCI was careful not to rule out tougher action later. The index provider reiterated that its indices are designed to track operating companies, not firms whose primary activity is investment-oriented.

MSCI acknowledged it still needs time to refine criteria that distinguish companies holding digital assets as part of core operations from those acting more like investment funds. Earlier discussions had floated excluding firms whose crypto holdings exceed 50% of total assets, though MSCI said other financial thresholds may also be considered.

In short, Strategy avoided immediate expulsion—but the threat hasn’t gone away.

The stakes are high. JPMorgan estimated last year that roughly $8.8 billion of Strategy’s market capitalization was held by passive index funds. Strategy’s leadership warned MSCI that removal from indices could trigger up to $2.8 billion in forced stock liquidations, potentially destabilizing the share price.

Index inclusion has also helped support Strategy’s premium over the value of its bitcoin holdings—a premium that has been steadily eroding.

Even before MSCI’s decision, Strategy’s ability to acquire more bitcoin was under pressure. At times, the company’s market value exceeded the value of its bitcoin stash by more than two times. That premium has nearly vanished.

At current prices, Strategy’s enterprise value sits at roughly 106% of its bitcoin holdings, based on a bitcoin price near $90,050. This creates a dilemma. To increase its bitcoin holdings by just 1%, Strategy would need to issue nearly 4 million new shares, diluting bitcoin per share in the process.

That runs counter to Strategy’s core investment narrative: growing bitcoin per share to give investors high-beta exposure to bitcoin itself. As prices stand, new purchases risk undermining that promise.

Issuing preferred stock is one alternative, but it comes at a cost. Strategy’s preferred shares typically carry interest rates around 11%, and the company already faces approximately $831 million per year in interest obligations.

While Strategy’s bitcoin reserves should cover those costs in most scenarios, investor concerns have made the company more cautious. Recently, Strategy raised $2.25 billion in cash through common stock sales to reassure markets it won’t be forced into fire-sale decisions.

Looking ahead, there’s another pressure point: up to $6.6 billion in convertible bonds could come due in 2027 and 2028 if MSTR shares remain below conversion levels.

Strategy’s leadership insists the company is not merely a passive bitcoin fund. Executive Chairman Michael Saylor has described the firm as an emerging digital credit company, offering high-yield financial products backed by bitcoin. Those products—primarily preferred shares—only make sense for both common and preferred shareholders if bitcoin appreciates well above 10% annually.

That vision may ultimately determine how MSCI classifies Strategy in the future.

Strategy shares initially jumped more than 6% when reports highlighted MSCI’s decision not to remove digital asset treasury firms. By early Thursday, the stock had slipped again, giving back some gains. Bitcoin, meanwhile, fell from above $92,300 to around $90,050 following the announcement.

The message from MSCI is clear: Strategy can stay in the index club—for now—but the rules are tightening. And for a company built on turning equity into bitcoin, that subtle shift could have outsized consequences.