- Strategy has retained its position in the Nasdaq 100 despite concerns over its Bitcoin-focused business model.
- MSCI is reviewing whether digital asset treasury firms like Strategy should remain in its indexes, with a decision due in January.
- A potential MSCI removal could trigger over $1.5 billion in passive fund outflows affecting Strategy and similar companies.
Michael Saylor’s firm, Strategy, will remain in the Nasdaq 100 following the latest annual index reshuffle. The decision comes despite scrutiny of the company’s Bitcoin-focused business model. Meanwhile, MSCI will decide on its inclusion in January, which could impact investor holdings.
Strategy Retains Nasdaq 100 Listing Despite Model Concerns
According to a report by Reuters, Strategy has secured its place in the Nasdaq 100 as part of the index’s year-end rebalancing update. The firm joined the Nasdaq 100 last December and has maintained its position. Nasdaq removed companies like Biogen and CDW Corporation from the index during this reshuffle.
The company transitioned from enterprise software to a Bitcoin accumulation model starting in 2020. Since then, its stock price has closely followed Bitcoin’s market movements. This shift has raised questions about whether it still qualifies as a tech company. Some analysts say Strategy resembles an investment fund more than a tech firm. “The initial listing on Nasdaq was a loophole that is within the law,” a strategist told Reuters. Despite such remarks, the company has retained its position in the index.
MSCI Decision Looms for Digital Asset Treasuries
Strategy’s presence in MSCI’s Global Investable Market Indexes remains under review. The index provider plans to announce its decision in January. Any exclusion may lead to portfolio adjustments by passive investment funds. MSCI is evaluating the classification of companies that hold digital assets as their primary business. Strategy has formally objected to the proposed changes. It argues the removal could impact investors holding positions through index-tracking funds.
Bitwise has also opposed the proposed rule changes. It stated that MSCI’s method introduces subjectivity to what should be a rule-based index construction. The debate has increased attention as MSCI’s indexes influence trillions in global investments. A strategist warned that the potential removal could trigger outflows from passive funds. “It may lead to passive funds worth more than $1.5 billion flowing out,” the person said. This would affect not only Strategy but also similar companies as well.
Company Faces Market Pressure as Bitcoin Correlation Increases
Strategy’s stock has declined around 65% from its peak within the past year. It is down nearly 36% in the current year. This trend tracks closely with Bitcoin’s price fluctuations . Critics argue that Strategy performance depends more on digital asset volatility than on business fundamentals. The company’s revenue sources remain limited outside of its Bitcoin holdings. This further fuels concerns about its classification in traditional equity indexes.
Despite this, Strategy continues to present itself as a tech firm. It maintains that its Bitcoin treasury strategy is a corporate innovation. The firm has not indicated plans to change its operating model. The Nasdaq 100 changes will take effect on December 22. Companies added include those from the pharmaceutical and hardware sectors. Strategy’s position remains, at least for now. MSCI will finalise its index reconstitution in January. Until then, Strategy and similar firms await the decision. The outcome could impact index-based portfolios globally.
