Possible MSCI Index Removal Puts Strategy at Risk of Billions in Outflows – Reuters

MicroStrategy Faces Possible MSCI Index Removal, Could Trigger Billions in Outflows

MicroStrategy (MSTR), the largest public holder of bitcoin, is in talks with index provider MSCI over a potential removal from major equity benchmarks—a move that could carry major financial implications.

Reuters reports that a decision is expected by Jan. 15. JPMorgan analysts estimate that if MSCI removes MicroStrategy and other index providers follow suit, the company could face outflows of up to $8.8 billion. Inclusion in indices such as MSCI USA and MSCI World means the stock is widely held across passive investment products.

“We’re engaging in that process,” CEO Michael Saylor told Reuters, adding that he was uncertain about the accuracy of JPMorgan’s outflow estimates.

The company, which holds 650,000 BTC on its balance sheet, has come under scrutiny after bitcoin prices dropped from over $120,000 to as low as $82,000. While bitcoin has partially rebounded to roughly $93,000—still about 26% below its all-time high—critics argue that MicroStrategy’s strategy of using debt and equity to accumulate BTC may not be sustainable. Shares of the company have fallen 37% so far this year.