- MSCI plans to remove Bitcoin treasury companies Strategy and Metaplanet from its indexes from November 30.
- The decision follows a change in MSCI’s methodology, which excludes companies considered non-operating businesses.
- The removal could lead to selling pressure on their shares as funds tracking MSCI indexes adjust their investments.
MSCI Announces Index Changes
Global index company MSCI has decided to drop Bitcoin treasury firms Strategy and Metaplanet from its indexes. The changes will come into effect on November 30 and may cause some share price movements.
MSCI said in a November 11 announcement that Strategy will be dropped from the company’s global standard indexes and Metaplanet will also be dropped from global small cap indexes.
Source: msci.com
The move comes after new methodology was implemented last month. Companies which are classified as non-operational such as investment funds will no longer be eligible to be included within the indexes.
Companies identified as non-operational due to large operating costs will be excluded from the index. MSCI believes that organisations that mainly deal with investments should be different to those who run standard business operations.
Bitcoin Treasury Strategy
Strategy has become one of the most well-known corporate holders of Bitcoin. The firm has developed around being a Bitcoin treasury holder. Bitcoin makes up a large chunk of the company’s balance sheet.
Metaplanet has also moved to become a Bitcoin treasury holder. This means that the recent decision from MSCI highlights how companies holding large amounts of digital assets will be classed.
Other Bitcoin treasury companies such as SharpLink, Cypherpunk and DeFi Development Corp. have also been added onto the MSCI watchlist.
Dropping Strategy and Metaplanet from the index may cause some issues for funds who track the MSCI investment benchmarks. They will typically buy a share in the companies featured in the indexes.
According to Strategy’s filing passive funds who track MSCI indexes hold almost $3 billion worth of the company’s shares. This makes up more than 3% of the total supply of shares available. If they sell their shares then this could add extra downward pressure.
Strategy Shares Under Pressure
Strategy’s shares were also under pressure. The stock is currently trading around $118 in after hours, having fallen over 3% according to TradingView.
The stock has fallen over 4% in the past week and roughly 20% in the last month. This puts the stock down over 22% for the year. This is a big shift from earlier where the shares were rising strongly as Bitcoin rose above $80,000.
The recent decision from MSCI is key for companies using Bitcoin as a core treasury asset. Whilst holding large amounts of Bitcoin has brought attention from investors it may cause problems for companies looking to get into traditional stock indexes.
Overall it will be interesting to see if traditional indexes will view these companies as operational or more like investment funds. This could impact how much institutional funds invest in Bitcoin treasury companies in the future.
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