Strategy (NASDAQ:MSTR) shares fell by about 3% on Friday morning due to investor concerns over potential exclusion from major MSCI equity indices.
JPMorgan analysts warned that if MSCI proceeds, billions of dollars could flow out of ETFs and mutual funds tied to the benchmarks.
The index provider is evaluating whether companies with 50% or more of their assets in digital currencies should remain in its global investable market indexes.
Strategy, with heavy investments in bitcoin (BTC-USD), could experience significant outflows ranging from $2.8 billion to $8.8 billion if MSCI and other index providers decide to exclude such companies.
Market Reaction
Strategy's shares dropped by 3% as investor concerns over MSCI exclusion intensified.
Potential Outflows
JPMorgan analysts caution that billions of dollars could flow out of related ETFs and mutual funds if companies like Strategy are excluded from major indices.
- Exclusion from key indices like MSCI USA and MSCI World may hinder Strategy's ability to raise capital through equity or debt.
The market pressure faced by Strategy due to its heavy bitcoin holdings highlights the potential risks associated with major index exclusions. With significant outflow projections, Strategy needs to carefully consider its investment strategies to mitigate adverse market impacts.