Key Takeaways
- •Strategy Inc. may be removed from major indices such as MSCI USA and Nasdaq 100 due to high digital asset exposure.
- •Index exclusion could trigger up to $2.8 billion in passive outflows and increase funding pressure.
- •The company’s valuation has dropped sharply as the premium over its Bitcoin reserves has largely disappeared.
A research note from JPMorgan this week highlighted that index providers are examining whether companies whose digital asset holdings represent more than half of total assets should remain eligible for inclusion. If the proposal is implemented, Strategy could lose its place in indexes such as MSCI USA and the Nasdaq 100. A decision from MSCI is expected by January 15.
The stakes are significant. JPMorgan estimates that roughly $2.8 billion could leave the stock if MSCI proceeds with removal, with additional outflows likely should other index providers adopt the same policy. Passive vehicles currently account for close to $9 billion of Strategy-related market exposure.
Market Position Weakens as Premium Disappears
Strategy’s valuation has declined sharply in recent months, falling more than 60% from its November peak. The company previously traded at a substantial premium to the value of its Bitcoin holdings, reflecting investor confidence in its capital strategy. That premium has now almost fully collapsed, leaving the company valued only marginally above the worth of its crypto reserves.
The selloff has also affected the firm’s financing instruments. Prices of perpetual preferred shares have dropped, and yields on the company’s 10.5% securities issued in March have risen to 11.5%, signaling tighter funding conditions. A recent euro-denominated preferred offering has already fallen below its issue price.
Model Faces Pressure as Crypto Market Declines
The backdrop is a broad contraction in the digital asset market. Bitcoin has fallen more than 30% from its 2025 high, and the overall crypto sector has shed more than $1 trillion in value. Strategy’s mNAV ratio—a metric comparing enterprise value with Bitcoin holdings—has fallen to around 1.1, indicating that the market is no longer assigning a meaningful premium to the company beyond its cryptocurrency inventory.
The firm built its expansion strategy on continuous access to equity and debt markets to increase Bitcoin reserves. With higher financing costs and weaker demand for its securities, that approach has become more difficult to sustain.
Index Decision Seen as a Major Turning Point
While the index proposals are still under consultation, analysts note that removal could have implications beyond short-term liquidity. Index membership has helped the stock maintain a broad institutional investor base and steady passive inflows. Exclusion could reduce ownership diversification and raise long-term capital costs.
Strategy has not issued a public statement regarding the consultations.
The MSCI review comes at a critical moment for companies classified as “digital asset treasuries.” Several peer firms have been adjusting reserves, selling tokens for liquidity, or adding leverage to continue operations during the current downturn. Index treatment could influence how sustainable that model remains across the sector.