Analysis: MSCI Temporarily Retains Strategy, but Implementation of Freeze Mechanism Weakens Index Fund Buying Effect

BlockBeats News, January 8, global stock and ETF market benchmark provider MSCI has announced that it will temporarily not remove the bitcoin treasury company Strategy. However, MSCI has simultaneously imposed a technical freeze on the number of shares of these companies. MSCI explained: "MSCI will not implement any increases in the Number of Shares (NOS), Foreign Inclusion Factor (FIF), or Domestic Inclusion Factor (DIF) for these securities. At the same time, MSCI will also postpone any new inclusions or size group adjustments for all securities on the preliminary list." Through this decision, MSCI has effectively severed the link between new equity issuance and automatic passive index fund buying.

This move means that the "forced selling" downside risk triggered by passive funds in the index mechanism has been removed. However, at the same time, the original "upside driving mechanism" of index trading has also been dismantled. Due to MSCI's technical freeze blocking automatic index fund buying, if Strategy wants to obtain new funds in the future, it will have to turn to active investors, which also poses a challenge to its model of relying on financing to continuously increase its bitcoin holdings.