Michael Saylor\u2019s Strategy, formerly known as MicroStrategy, has found itself significantly exposed to the ongoing downturn in the cryptocurrency market, which has seen more than $1 trillion in total market capitalization wiped out over the past month.\u00a0<\/p>\n
As the largest public holder of Bitcoin, with over 650,000 coins, the company is now facing the real threat of being removed from major benchmark indices, which have been crucial for its visibility in mainstream portfolios.<\/p>\n
According to a recent Bloomberg report<\/a>, analysts at JPMorgan Chase have issued a warning that Saylor\u2019s firm may lose its standing in key indices such as MSCI USA and the Nasdaq 100.\u00a0<\/p>\n The analysts assert that this could result in passive outflows estimated between $2.8 billion and $8.8 billion if MSCI proceeds with a decision expected by January 15. Passive funds connected to the company currently account for nearly $9 billion in market exposure, making any index exclusion a substantial blow.<\/p>\n Strategy\u2019s business model has relied on a cyclical strategy of selling stock to buy Bitcoin, capitalizing on price rallies<\/a>, and repeating this process. At its zenith, Saylor\u2019s company\u2019s market capitalization far exceeded the value of its Bitcoin holdings.<\/p>\n However, that premium has evaporated, and the company\u2019s valuation now aligns closely with its crypto reserves\u2014a stark indication that investor confidence is fading rapidly.<\/p>\n \u201cWhile active managers are not bound to adhere to index changes, exclusion from major indices would undoubtedly be viewed negatively by market participants,\u201d noted JPMorgan analysts, led by Nikolaos Panigirtzoglou. Such a shift could affect liquidity, increase funding costs, and diminish overall investor appeal.<\/p>\n In its ongoing consultations with stakeholders, MSCI indicated that some market players believe digital asset treasury firms<\/a> (DATs) may function more like investment funds, which are ineligible for index inclusion.\u00a0<\/p>\n In accordance with these perspectives, MSCI has proposed excluding companies whose holdings in digital assets constitute 50% or more of their total assets from its global investment market indexes.\u00a0<\/p>\n Since peaking last November, Saylor\u2019s firm has seen its shares (MSTR) decline by over 60%, causing a collapse in the premium that once attracted momentum and crypto-focused investors<\/a>.\u00a0<\/p>\n Despite this slump, Saylor\u2019s company remains up over 1,300% since he first began purchasing Bitcoin in August 2020, outperforming major equity indices throughout this period.<\/p>\n The selloff has extended its reach into the company\u2019s newer funding structures, as well. The prices of its perpetual preferred shares\u2014an essential part of Saylor\u2019s recent strategies\u2014have seen sharp declines.\u00a0<\/p>\nMSCI Contemplates New Index Inclusion Rules<\/h2>\n