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Key Takeaways

• Strategy has kept its spot on Nasdaq 100 despite Bitcoin model concerns.
• MSCI will decide in January if firms like Strategy stay on global indexes.
• Strategy’s stock dropped 65% from the peak amid its Bitcoin-focused strategy.
• The MSCI review could trigger $1.5 billion in passive fund withdrawals from DATs.

Michael Saylor’s company, Strategy, has successfully maintained its place in the Nasdaq 100 index after the latest round of adjustments. This marks over a year since it joined the prestigious list, even as the firm faces growing scrutiny over its Bitcoin-centered business model. The company’s continued presence on the Nasdaq 100 highlights its influence within the tech sector, even as questions about its operational model persist.

Nasdaq 100 Rebalancing and Strategy’s Continued Inclusion

The recent rebalancing of the Nasdaq 100 led to the removal of several companies, including Biogen and CDW Corporation. At the same time, new firms, particularly in the pharmaceutical and computer hardware sectors, joined the index. Despite these changes, Strategy has managed to retain its spot on the list, underscoring its ongoing role in the technology space.

Strategy originally gained entry into the Nasdaq 100 last year as a technology company. However, the firm has since shifted its focus from developing enterprise software to accumulating Bitcoin as part of its corporate strategy. This change in direction has sparked debates about whether the company still fits within the technology sector or if it has become more akin to an investment fund, given its heavy reliance on Bitcoin’s price fluctuations.

While the Nasdaq 100 is generally composed of the top non-financial companies in the U.S., the inclusion of firms like Strategy has led to increased scrutiny. Some analysts argue that such companies may no longer meet the criteria for inclusion in the index, considering their business models are less focused on innovation and more on asset accumulation.

MSCI’s Review of Digital Asset Treasury Companies

Alongside the Nasdaq 100 developments, Strategy is awaiting a decision from MSCI regarding its inclusion in the MSCI Global Investable Market Indexes. The decision, expected in January, could lead to the removal of Strategy and other digital asset treasury companies (DATs) from MSCI’s benchmarks.

MSCI has been reviewing whether companies with significant holdings in digital assets should remain on its indexes. This review is particularly important since MSCI indexes are used by trillions of dollars in global investments. Should Strategy and similar firms be excluded, it may prompt large-scale sell-offs from passive funds that track MSCI’s indices.

MSCI’s proposed exclusion of DATs stems from concerns that companies with over 50% of their reserves in crypto could face removal. This potential decision has generated significant discussion in the investment community, with some arguing that it introduces subjective criteria to an otherwise objective process. Bitwise, a crypto-focused ETF issuer, has supported the argument that MSCI’s current review risks introducing judgment into an index that should strictly follow clear, rule-based standards.

Potential Financial Consequences of MSCI’s Decision

The possible removal of Strategy and other DATs from MSCI’s indexes could have substantial financial consequences. Experts estimate that over $1.5 billion could be pulled from passive funds if these firms are delisted. Additionally, the company’s stock has already experienced a significant drop, losing approximately 65% of its value from its peak in the past year and 36% this year alone.

Despite the challenges, Strategy has formally objected to MSCI’s review process, highlighting potential negative effects on investors. The company argues that digital asset treasury firms should not be treated differently from other companies that concentrate their assets in commodities, such as oil or gold, without facing similar scrutiny.

Strategy’s Future in Major Indexes

As the debate around MSCI’s decision continues, Strategy remains focused on securing its place in both the Nasdaq 100 and MSCI’s indexes. With key decisions looming, the outcome will likely have lasting effects on the firm’s standing in global financial markets.

As the company navigates these challenges, its future in these indexes remains uncertain, depending on how MSCI decides to handle the growing sector of digital asset treasury companies.

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