Saylor’s Strategy Under Threat: Index Status At Risk With $8 Billion On The Line
Overview
Michael Saylor’s Strategy, previously known as MicroStrategy, is facing significant challenges due to the downturn in the cryptocurrency market, which has seen a substantial loss in total market capitalization. As the largest public holder of Bitcoin, the company’s current situation could lead to its removal from major benchmark indices, affecting its visibility and market standing.
Current Situation
The cryptocurrency market has experienced a decline of over $1 trillion in total market capitalization within the past month. Michael Saylor’s company holds over 650,000 Bitcoin, making it the largest public holder of the asset. Analysts at JPMorgan Chase have raised concerns regarding the potential exclusion of the firm from important indices such as MSCI USA and the Nasdaq 100. This exclusion could result in passive outflows ranging from $2.8 billion to $8.8 billion, significantly impacting the company’s market exposure, which currently stands at nearly $9 billion.
The business model of Saylor’s firm relies on a cyclical strategy of selling stock to acquire Bitcoin, which has historically capitalized on price rallies. However, the company’s market capitalization has recently aligned more closely with the value of its Bitcoin holdings, suggesting a decline in investor confidence. Analysts have indicated that while active managers are not required to follow index changes, being excluded from major indices would likely have negative implications for market perception.
MSCI’s Considerations
MSCI is currently reviewing its index inclusion rules and has engaged with stakeholders regarding the treatment of digital asset treasury firms (DATs). Some market participants believe that DATs should be classified similarly to investment funds, which are not eligible for index inclusion. Consequently, MSCI has proposed excluding companies with digital asset holdings that constitute 50% or more of their total assets from its global investment market indexes.
Company Performance and Challenges
Since peaking in value, Saylor’s firm has experienced a decline of over 60% in its shares. This drop has led to a collapse of the premium that previously attracted both momentum and crypto-focused investors. Despite this downturn, the company has seen a remarkable increase of over 1,300% since Saylor began purchasing Bitcoin in August 2020, outperforming major equity indices during this timeframe.
The selloff has also impacted the company’s newer funding structures. The prices of its perpetual preferred shares have sharply declined, and yields on securities issued in March have risen to 11.5%, an increase from a prior 10.5%. Additionally, a recent euro-denominated preferred stock offering has fallen below its discounted offering price within two weeks.
Impact on the crypto market
- The potential exclusion of Saylor’s firm from major indices could lead to significant passive outflows, impacting market liquidity.
- A decline in investor confidence may result in increased funding costs for the company and potentially for the broader market.
- The ongoing consultations by MSCI regarding index inclusion rules could set a precedent affecting other firms with substantial digital asset holdings.
- The struggles of Saylor’s firm could serve as a cautionary tale for other companies heavily invested in cryptocurrencies.
- Market participants may reassess their strategies regarding investments in companies with significant exposure to digital assets.
Updated: 11/21/2025, 10:26:40 AM
