What does being "removed" from the index mean for the "leading stock in the crypto circle" MTSR?

"Cryptocurrency sector leader" MicroStrategy is facing a potential risk that could shake its market position: being removed by global index provider MSCI.

Index giant MSCI recently proposed in a statement to exclude companies that hold significant digital assets as inventory reserves (referred to as "Digital Asset Treasury Companies," or DATs) from its global investable market index. As a typical representative known for holding a large amount of Bitcoin, MicroStrategy is at the forefront.

In response, the analyst team led by Nikolaos Panigirtzoglou at JP Morgan pointed out that this speculation may be one of the factors putting pressure on MSTR's stock price recently. They warned that if MSTR is ultimately removed, its valuation will face "considerable pressure," as passive mutual funds and ETFs tracking the MSCI index will be forced to sell the stock.

Analyst Nikolaos estimated that at the time, approximately $9 billion of MicroStrategy's market capitalization of about $59 billion was held by investment vehicles tracking various indices. Among them, the funds explicitly tracking the MSCI index amount to about $2.8 billion. This means that once the removal decision takes effect, it could trigger a mandatory sell-off of up to $2.8 billion.

Although MicroStrategy's founder Michael Saylor emphasized that the company has a substantial software business, attempting to distinguish it from purely investment vehicles, the market's focus has shifted to MSCI's final decision. The outcome of this event will test the positioning and future of this "Bitcoin giant" in traditional financial markets.

Can the market absorb the shock?

Will such a large-scale sell-off crush MSTR's stock price? Industry research analyst James Seyffart believes that while the sell-off pressure is enormous, it may still be within the market's controllable range.

Data shows that from 2025 to date, MSTR's average daily trading volume is slightly above $4.8 billion. A $2.8 billion sell order is equivalent to nearly 60% of its average daily trading volume.

Seyffart pointed out that this transaction "although clearly massive," is still within MSTR's trading liquidity capacity. However, such concentrated selling will undoubtedly have a significant impact on the stock price in the short term.

The Debate on MicroStrategy's "Dual Identity"

In the face of the risk of being reclassified, MicroStrategy founder Michael Saylor publicly defended on social media platform X, emphasizing that the company is not just a "Digital Asset Treasury Company." He pointed out that MicroStrategy has a "very real software business valued at $500 million."

This view is not without supporters. Less than a year ago, the Nasdaq Global Index included MicroStrategy in the Nasdaq 100 Index, which to some extent indicates that the index provider recognizes its attributes as a technology company Now, investors are waiting to see if MSCI will reach the same conclusion