MSCI excludes Strategy, Metaplanet and Upexi shares from its indices. The decision takes effect after market close on November 30. Strategy is the former MicroStrategy, Michael Saylor's company and the largest public holder of Bitcoin.
MSCI compiles global stock indices, and thousands of funds track them. A passive fund simply replicates the index composition and does not pick securities by hand. If a company drops out of the index, the fund is obliged to sell it.
For a trader, this is a known-in-advance date of large sales in a specific security. The volume of such sales has already been calculated.
How much will have to be sold?
JPMorgan's estimate is about $2.8 billion. That is how much Strategy stock passive funds will be forced to dump after its exit from the MSCI USA index.
- $2.8 billion - the volume of forced sales according to JPMorgan's calculations
- 850,364 BTC - on Strategy's balance sheet per the latest SEC filing
- $64.16 billion - the amount for which this Bitcoin was purchased
- November 30 - the exclusion date, after market close
Why is MSCI changing the rules?
A new rule as of October 15. MSCI now considers companies without substantial operating assets "non-operating" and does not admit them to global indices.
- Formally, it is a software company. Strategy still makes software, but the main part of its balance sheet is Bitcoin.
- Access to Bitcoin through a stock is not a business. MSCI no longer considers such a model a standalone business.
- Two more companies fell under the rule. Along with Strategy, Metaplanet and Upexi are leaving the indices.
What about the price and the company's response?
The price reaction is weak so far. At Wednesday's close the stock was worth $122.35 (+1.06%), and in the evening session after the news it fell 0.85% to $121.31.
Strategy resisted the rules. In its letter, the company called the approach erroneous and the wording contrary to securities law and accounting.
Michael Saylor put it more briefly: "MSCI should reflect the market, not define it".
What does this mean for a trader?
The date is known in advance. November 30 will be a day of mechanical selling, and it is worth keeping in view.
- Date - November 30, after market close; you can mark it in the economic calendar
- Volume - about $2.8 billion according to JPMorgan's calculations
- Price reaction - so far 0.85% down, to $121.31
- If prop trading is a new topic for you - how it works is explained in the academy
What's next?
The main test is November 30. After that, everything depends on whether other index providers repeat MSCI's rule.
- $8.8 billion - how much more could leave the market according to JPMorgan's estimate in such a scenario
- SharpLink, TON Strategy and Solana Company - remain under watch with a risk of exclusion
Do you hold stocks with a crypto balance sheet?
The date of forced sales is known in advance, and such days are working material for a trader. The question is how much a worked day brings: in an account of a couple thousand dollars, the difference between $122 and $118 on a stock is taxi money. Prop trading breaks the link between the size of your account and the size of your savings: you pay for selection, pass it according to the company's rules, and then work with its nominal capital for a share of the profit. There is time before November 30 to understand how this path works.