8.8 billion USD outflow countdown, MSTR is becoming a pawn of global index funds.

Recently, Bitcoin has experienced a big dump, and MicroStrategy is not having a good time either.

MSTR's stock price fell from a high of $474 to $177, a decrease of 67%. During the same period, Bitcoin dropped from $100,000 to $85,000, a fall of 15%.

Moreover, the mNAV, which is the premium of market value relative to Bitcoin's net value.

At its peak, the market was willing to pay 2.5 dollars for every 1 dollar of Bitcoin held by MSTR, and now that number is 1.1 dollars, almost no premium.

The past model was: issue stocks → buy Bitcoin → stock price rises (because of the premium) → issue more stocks again. Now the premium has disappeared, and issuing stocks to buy coins has become a zero-sum game.

Why is this happening?

Of course, the recent big dump of Bitcoin is one reason. But MSTR has fallen much more severely than BTC, and there is a bigger panic behind it:

MSTR may be kicked out of the global major stock indices.

In simple terms, there are trillions of dollars in funds globally that are “passive investments”; they do not pick stocks but mechanically buy all the components in the index.

If you are in the index, this money automatically buys you; if you are kicked out, this money must sell you, no discussion.

This decision is in the hands of a few large index companies, with MSCI being the most important one.

Now, MSCI is considering a question: When a company has 77% of its assets in Bitcoin, does it still count as a normal company? Or is it actually a Bitcoin fund dressed in the guise of a listed company?

On January 15, 2026, the answer will be revealed. If MSTR is really kicked out, about 8.8 billion dollars of passive funds will be forced to withdraw.

For a company that relies on printing stocks to buy coins, this is almost a death sentence.

When passive funds cannot buy MSTR

What is MSCI? Imagine it as the “exam question committee” of the stock market.

Trillions of dollars in global pensions, sovereign funds, and ETFs are tracking the indices compiled by MSCI. These funds do not conduct research or look at fundamentals; their task is to completely replicate the index - whatever is in the index, they buy; whatever is not in the index, they do not touch a single share.

In September this year, MSCI began discussing a question:

If a company's digital assets (mainly Bitcoin) exceed 50% of its total assets, can it still be considered a “normal publicly traded company”?

On October 10, MSCI released an official consultation document. The logic of the document is quite straightforward: companies that hold a large amount of Bitcoin are more like investment funds rather than “operating businesses.” And investment funds are never allowed to enter stock indices. Just like you wouldn't put a bond fund into a technology stock index.

What is the current situation of MicroStrategy? As of November 21, the company holds 649,870 Bitcoins, valued at approximately $56.7 billion at current prices. The company's total assets are about $73-78 billion. Bitcoin accounts for 77-81%.

far exceeded the 50% red line.

Worse still, CEO Michael Saylor never hides his intentions.

He has stated in several public occasions that the quarterly revenue of the software business is only $116 million, and its main purpose is to “provide cash flow to service debt” and “provide regulatory legitimacy for the Bitcoin strategy.”

What will happen if I get kicked out?

According to a research report by JPMorgan on November 20, if MSTR is only removed by MSCI, it will face a passive fund outflow of about $2.8 billion. However, if other major index providers (NASDAQ, Russell, FTSE, etc.) follow suit, the total outflow could reach $8.8 billion.

MSTR is currently included in several major indices: MSCI USA, NASDAQ 100, Russell 2000, etc. Passive funds tracking these indices hold approximately $9 billion worth of MSTR shares.

Once excluded, these funds must sell. They have no choice, as stipulated in the fund's articles.

What does 8.8 billion dollars mean? MicroStrategy's average daily trading volume is about 3 to 5 billion dollars, but this includes a lot of high-frequency trading. If the 8.8 billion of one-way selling pressure is released in a short period, it would be equivalent to having only sell orders without buy orders for two to three consecutive days.

It should be noted that the daily trading volume of MSTR is between 3 to 5 billion USD, but this includes high-frequency trading and liquidity provided by market makers. A one-way selling pressure of 8.8 billion is equivalent to 2 to 3 days of total trading volume being sell orders. The bid-ask spread will widen from the current 0.1 to 0.3% to 2 to 5%.

History tells us that index adjustments are ruthless.

When Tesla was included in the S&P 500 in 2020, its trading volume reached 10 times the usual amount in a single day. Conversely, when General Electric was removed from the Dow Jones Index in 2018, its stock price fell by 30% within a month after the announcement.

On December 31, the consultation period ends. The official ruling will be announced on January 15 next year. According to the current rules in the MSCI consultation document, being removed is almost a foregone conclusion.

The flywheel for buying coins with stocks is stuck.

MicroStrategy's core strategy over the past 5 years can be simplified into a cycle: issue stock to raise funds → buy Bitcoin → stock price rises → issue more stock.

The premise for this model to operate is that the stock must have a premium. If the market is willing to pay $2.5 for every $1 Bitcoin held by the company (mNAV=2.5 times), then issuing new shares to buy coins can create value.

You dilute 10% of the shares, but the assets may increase by 15%, so the shareholders overall still make a profit.

During the peak period in 2024, MicroStrategy's mNAV did indeed reach 2.5 times and even briefly touched 3 times. The reasons for the market to give a premium include Saylor's execution ability, first-mover advantage, and that this is a convenient channel for institutions to indirectly hold Bitcoin.

But now the mNAV has fallen to 1, basically at par.

The market may have already priced in the removal of MicroStrategy from the MSCI.

Once kicked out of the main index, MicroStrategy would turn from a mainstream stock into a niche Bitcoin investment tool. A case in point is the Grayscale Bitcoin Trust (GBTC), which changed from a 40% premium to a long-term discount of 20-30% after better Bitcoin ETFs emerged.

When the mNAV approaches 1, the flywheel can no longer turn.

Issuing new stocks worth 10 billion, buying 10 billion in Bitcoin, the company's total value remains unchanged. It's just a transfer from one hand to the other, creating nothing except diluting the old shareholders.

Debt financing is still an option; MicroStrategy has issued $7 billion in convertible bonds. However, debt must be repaid, and when stock prices fall, convertible bonds turn into pure debt burdens instead of quasi-equity.

Saylor's response and market perspective

In response to the threat of MSCI possibly removing, Michael Saylor's reply is very much in his style.

On November 21, he posted a long article on X, with the core viewpoint being: MicroStrategy is not a fund, not a trust, and not a holding company. He also used the art of language to circumvent the qualitative assessment of MSCI:

“We are a publicly traded operating company with a $500 million software business that has adopted a unique Bitcoin capital strategy.”

He emphasized that funds and trusts are merely passive holders of assets, while MicroStrategy is involved in “creating, building, issuing, and operating”. This year, the company completed five public offerings of digital credit securities: STRK, STRF, STRD, STRC, and STRE.

The implication is: we are not simply hoarding coins, but rather engaging in complex financial operations.

But the market seems not to care much about these excuses.

The stock price trend of MSTR has decoupled from Bitcoin, not in the sense that the correlation has decreased, but rather that it has fallen even more severely than Bitcoin. This is likely reflecting the market's concerns about its index status.

Joy Lou, a partner at Cycle Capital, posted that after stocks are excluded, the daily trading volume may fall by 50-70% within 90 days.

The more serious issue is the debt problem. MSTR has $7 billion in convertible bonds, with conversion prices ranging from $143 to $672. If the stock price falls to the $180-$200 range, the debt pressure will increase sharply.

Her conclusion is quite pessimistic. After the liquidity dries up, the risk of MSTR falling below 150 dollars will increase sharply.

In the voices of analysis from other communities, there is also a fair amount of pessimism. For example, after MSTR was removed from the index, the ETF automatically sold off, causing the stock price to fall and dragging BTC down, which could then create a vicious cycle of “Davis double kill.”

The so-called “Davis double kill” refers to the stock price plummeting due to the decline in valuation and earnings per share.

Interestingly, these analysts all coincidentally mentioned a word: passive.

The passive selling of passive funds, passively triggering debt clauses, and passively losing liquidity. MSTR has transformed from an active Bitcoin pioneer into a passive victim of the rules.

The consensus in the market is becoming increasingly clear; it's not a matter of Bitcoin's rise or fall, but rather that the rules of the game have changed.

Saylor still insists on never selling coins in a recent interview. MSTR proves that companies can go all-in on Bitcoin, but the MSCI index may be proving that the cost of doing so is being exiled from the mainstream market.

Is DAT still a good business below the 50% red line?

MicroStrategy is not the only publicly traded company that holds a large amount of Bitcoin. According to MSCI's preliminary list, there are 38 companies under observation, including Riot Platforms, Marathon Digital, Metaplanet, and others. They are all watching what will happen on January 15.

The rules are very clear: 50% is the red line. If you exceed it, you are a fund, not a company.

This draws a clear line for all DAT companies: either keep their crypto holdings below 50% to remain in the mainstream market, or exceed 50% and accept the fate of being ostracized.

There is no middle ground. You cannot enjoy the passive buying of index funds while turning yourself into a Bitcoin fund. MSCI's rules do not allow for this kind of arbitrage.

This is a blow to the entire business's approach to holding crypto assets.

In the past few years, Saylor has been preaching, convincing other CEOs to add Bitcoin to their balance sheets. The success of MSTR (its stock price once rose tenfold) is the best advertisement, and now this advertisement is about to be taken down.

In the future, companies that want to hold a large amount of Bitcoin may need a new structure. For example:

Establish an independent Bitcoin trust or fund

Indirectly hold Bitcoin by purchasing Bitcoin ETF

Stay below the “safety line” of 49%

Of course, some people think this is a good thing. Bitcoin should not rely on the financial engineering of a particular company. Let Bitcoin be Bitcoin, and let companies be companies, each to their own.

Five years ago, Saylor pioneered the corporate Bitcoin strategy. Five years later, this matter seems to be about to be concluded by a boring financial document. But this may not be the end, but rather force the market to evolve into new models.

Due to the 50% red line from MSCI, MicroStrategy will not go bankrupt, and Bitcoin will not go to zero. But the era of unlimited “printing stocks to buy coins” is over.

But for investors who still hold MSTR and various DAT company stocks, are you buying MSTR because you are optimistic about Bitcoin, or because you are optimistic about Saylor as a person? If it's the former, why not just buy coins or ETFs directly?

After being kicked out of the index, MSTR will become a niche investment. Liquidity will decrease and volatility will increase. Can you accept that?

The final result will be revealed on January 15, 2026, and the market has already begun to cast its votes with its feet.