Strategy Faces Major Market Test as MSCI Considers Index Exclusion - What’s Next?

A popular investment strategy just hit a major regulatory speed bump. MSCI, the global index giant, is reportedly weighing whether to kick it out of its benchmark indices. That's not just a headline—it's a potential portfolio earthquake.

The Core of the Controversy

Index inclusion isn't just a badge of honor; it's a direct pipeline to billions in passive fund flows. Getting the boot reverses that pipeline, forcing funds that track the index to sell. The strategy in question now faces that exact pressure test. It's a classic clash between innovative financial structures and the rigid rulebooks of traditional finance.

Why This Move Matters

MSCI's indices are the bedrock for countless ETFs and institutional portfolios. An exclusion decision would trigger forced selling on a massive scale, creating immediate liquidity pressure and casting a long shadow over the strategy's legitimacy. It's a reminder that in high finance, the rule-makers still hold the ultimate veto power—often with the subtlety of a sledgehammer.

Looking Beyond the Headline

This isn't necessarily an endgame. It's a stress test. How the strategy's underlying assets weather the potential sell-off will tell us more about its real resilience than any bull market rally ever could. True innovation isn't just about disrupting markets; it's about surviving their backlash.

The final call from MSCI will be a defining moment. It will either validate the strategy as a mainstay or relegate it to the fringe—proving once again that on Wall Street, you're only invited to the party until someone changes the guest list.

Strategy, the largest corporate holder of Bitcoin, is now at the center of a growing risk in global equity markets. Chairman Michael Saylor confirmed to Reuters that the company is actively engaging with MSCI after the index provider proposed a rule that could remove firms holding more than 50% of their assets in digital assets from major benchmarks. The decision, expected on January 15, 2026, has become a key date for both Strategy and the broader digital-asset industry.

MSCI’s proposal, introduced on October 10, could reclassify Bitcoin-heavy companies as “digital asset funds,” making them ineligible for widely followed global indexes. Because trillions of dollars in passive investments track MSCI benchmarks, exclusion WOULD force index funds to sell Strategy stock immediately, not gradually. JPMorgan estimates potential outflows could reach $8.8 billion if other index providers follow suit.

A Fragile Market Faces a Structural Shock

This risk comes at a time when both Bitcoin and Strategy’s stock are under pressure. After reaching record highs above $120,000 in October, Bitcoin has dropped sharply amid broad risk aversion, concerns about a potential tech bubble driven by AI, and global economic uncertainty. Strategy’s stock, described by Saylor as a “leveraged version of Bitcoin,” has fallen more than 37% this year, amplifying the crypto market’s downturn.

Strategy currently sits in MSCI’s USA and World indices, meaning a large portion of its investor base consists of passive funds such as ETFs. JPMorgan warns that exclusion could raise questions about the company’s future ability to raise debt and equity—a critical issue for a business built on acquiring more Bitcoin.

Saylor told Reuters that the company is participating in MSCI’s consultation but questioned whether JPMorgan’s outflow estimates are accurate. He also acknowledged the inherent volatility: “If bitcoin falls, the equity is going to fall more, because the equity is built to fall.”

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What Comes After January 15th?

Two paths lie ahead. If MSCI enforces the exclusion, markets could see pre-emptive selling in January, followed by forced index rebalancing in February. This would not necessarily trigger a full bear market but would reduce one of the strongest links between traditional capital and Bitcoin.

In a more positive outcome, MSCI could maintain the Strategy’s index eligibility, removing the overhang and reopening the door to broader institutional adoption.

Crypto analyst Khan says that most concerns around Strategy are overstated. The company’s debt is not backed by Bitcoin, no lender can force liquidations, and cash reserves cover operations for nearly two years. Still, he warns that a DEEP bear market could test the company’s model.

For now, the crypto sector is watching January 15 closely, a date that could redefine how digital-asset companies interact with global financial markets.

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