With MSCI having put in place new criteria, MicroStrategy is under threat from the index provider\u2019s rules. The company could be removed from the indices, an event that would impede any plans to add to its Bitcoin holdings and compel as much as $1.8 billion in share sales.<\/p>\n
The latest rules from MSCI are of particular concern to those with a large digital asset portfolio. Under the new criteria, a firm putting 50 percent or more of its assets in digital currencies is liable to be excluded from the MSCI indices. In the case of MicroStrategy and its considerable Bitcoin position, this is no mere formality; Michael Saylor\u2019s company is squarely in the line of fire.<\/p>\n
MicroStrategy does not pass four of the five inclusion tests MSCI has set out. That non-compliance may well lead to the company being removed from the many ETFs and portfolios that follow MSCI benchmarks.<\/p>\n
Should MSCI go through with an exclusion, it will be felt immediately. One can expect index funds and ETFs to have to sell their holdings, some $1.8 billion worth. The resulting lack of demand for the stock would curtail MicroStrategy\u2019s options for equity financing to put towards more Bitcoin.<\/p>\n
Coin Bureau analysis suggests that while this would not mean MicroStrategy has to part with any of the Bitcoin it holds, it would make buying more in the future more difficult since investor interest would wane and the avenue of stock sales for capital would be closed off.<\/p>\n
It is not only MicroStrategy contending with these headwinds; similar exposure to digital assets puts MetaPlanet and Sharplink in danger of being excluded by MSCI as well.<\/p>\n
And there are signs of the strain: Coin Bureau reports that MicroStrategy is devoting itself more to share buybacks than to new Bitcoin acquisitions. A telling indication of how public companies with crypto on their books are finding the environment more difficult as they deal with market forces and revised index requirements.<\/p>\n
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