On Wednesday, shares of MicroStrategy (MSTR) surged by 6% following the announcement from Morgan Stanley Capital International (MSCI) that it would continue including digital asset treasury companies (DATCOs) in its indexes. This news put an end to speculation surrounding the potential exclusion of MicroStrategy, the foremost player in the Bitcoin treasury market, led by CEO Michael Saylor.
Strategy Maintains Index Designation
Concerns about MicroStrategy’s standing in the index had been prevalent, coinciding with a noticeable drop in cryptocurrency prices, including Bitcoin, on October 10. Investors had been anxious about the implications of losing such a key index status.
In its announcement dated January 6, MSCI confirmed that it would not proceed with the proposal to exclude DATCOs from the MSCI Global Investable Market Indexes during its upcoming February 2026 Index Review. As a result, companies that maintain at least 50% of their assets in digital currencies will retain their index categorizations.
However, MSCI did implement a vital adjustment in its guidelines, which could have major ramifications for treasury-focused firms such as MicroStrategy.
Capital-Raising Challenges Ahead
Analysts at Bull Theory pointed out that traditionally, whenever MicroStrategy issued new shares to raise capital, MSCI would include these shares in its index, thereby creating a built-in demand from index funds. Typically, these funds would be obligated to acquire around 10% of the newly issued shares. This dynamic had historically provided a significant boost to MicroStrategy.
To illustrate, should the shares be priced at $300 each and the firm issued 20 million new shares, index funds would be required to purchase approximately $600 million worth of shares, facilitating MicroStrategy’s capacity to raise capital and subsequently acquire more Bitcoin.
Under the new MSCI rule, while MicroStrategy is still permitted to issue shares, MSCI will no longer increase the share count in its indexes. Consequently, index funds will not be compelled to purchase any new shares, effectively removing this automatic demand.
This evolution necessitates that MicroStrategy seek private buyers for its newly issued shares, which may result in less capital raised, ultimately hampering its potential to expand its Bitcoin holdings.
Market expert Crypto Rover raised an important query: why did MSCI implement this alteration? Given MSCI’s roots with Morgan Stanley, the connection to this banking giant is particularly pertinent.
Reports indicate that Morgan Stanley has filed for a spot Bitcoin and Solana (SOL) exchange-traded fund (ETF), positioning both Morgan Stanley and MicroStrategy as direct rivals in the crypto investment landscape.
As Rover pointed out, many investors choose MicroStrategy as a vehicle for passive exposure to Bitcoin, leading to the stock’s steady rise and solidifying the company’s status as the largest corporate holder of Bitcoin.
However, with the MSCI’s new directive, Rover warns that MicroStrategy could struggle to amass additional Bitcoin. Any attempts at share dilution might result in substantial declines in MSTR stock due to the absence of passive demand.
Furthermore, this situation could entice large investors to shift their allocations from MicroStrategy and similar treasury firms to Bitcoin ETFs, especially in light of the expectation that Morgan Stanley’s ETF will draw significant investments.
As of this writing, MicroStrategy trades at $166, having shown slight recovery from a 16-month low of $150 reached just last Friday.
