If excluded from the index, what does this mean for "crypto leading stock" MTSR?

“Crypto blue-chip” 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 holding large amounts of digital assets as treasury reserves (i.e., "Digital Asset Treasury companies," DATs) from its global investable market indices. MicroStrategy, well known for its massive Bitcoin holdings, is a prime example. In response, JP Morgan’s analyst team led by Nikolaos Panigirtzoglou noted that this speculation may be one of the factors putting pressure on MSTR’s recent stock price. They warn that if MSTR is ultimately removed, its valuation will face “significant pressure” because passive mutual funds and ETFs tracking MSCI indices would be forced to sell the stock. Analyst Nikolaos estimates that, out of MicroStrategy’s then-$59 billion market cap, about $9 billion was held by investment vehicles tracking various indices. Of this, funds explicitly tracking MSCI indices totaled about $2.8 billion. This means, once the removal decision takes effect, it could trigger a mandatory sale of $2.8 billion worth of shares. Though MicroStrategy founder Michael Saylor emphasizes the company has a substantial software business, trying to distinguish it from a pure investment vehicle, market attention is now focused on MSCI’s final decision. The outcome of this incident will test this “Bitcoin whale’s” position and future in traditional financial markets. Can the market absorb the impact? Will such a large sell-off crush MSTR’s share price? Industry research analyst James Seyffart believes that although the selling pressure is huge, it may still be within the market’s controllable range. Data shows that so far in 2025, MSTR’s average daily trading volume is slightly above $4.8 billion. A $2.8 billion sell order would amount to nearly 60% of its daily average trading volume. Seyffart points out that while this trade is “obviously huge,” it remains within MSTR’s liquidity capacity. However, such concentrated selling will undoubtedly have a significant short-term impact on the share price. Debate over MicroStrategy’s “dual identity” Faced with the risk of reclassification, MicroStrategy founder Michael Saylor publicly defended the company on social media platform X, emphasizing that it is not just a “Digital Asset Treasury company.” He pointed out that MicroStrategy has a “very real” software business worth $500 million. This view is not without support. Less than a year ago, the Nasdaq Global Index included MicroStrategy in the Nasdaq 100 Index, indicating to some extent that the index provider recognizes its nature as a tech company. Now, investors are waiting to see whether MSCI will reach the same conclusion. Risk Warning and Disclaimer The market has risks, investment needs caution. This article does not constitute personal investment advice and does not take into account the individual investment objectives, financial situations, or needs of specific users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Any investment based on this is at your own risk.