MicroStrategy delisted by MSCI? Opposition group: $15 billion in passive funds may exit

Morgan Stanley Capital International Index (MSCI) announced in October that it is consulting on whether to exclude companies with most of their assets on their balance sheets in crypto, which could trigger forced sell-offs of $10 billion to $15 billion. Opposing group BitcoinForCorporations predicts this scale based on a list of 39 companies with a total market cap of $113 billion, adjusted for circulating shares.

Chain Reaction Mechanism of MSCI Index Delisting

(Source: BitcoinForCorporations)

The MSCI index is a key benchmark that determines which companies passive investment funds must hold, so inclusion or exclusion from the index is crucial for companies to access capital. When a company is removed from the MSCI index, all passive funds tracking that index are required to sell the company’s shares within a specified timeframe. This is a mandatory obligation under fund contracts and investment strategies, not a discretionary decision by fund managers.

Assets tracking the MSCI index amount to trillions of dollars worldwide, with a significant portion in passive index funds and ETFs. These funds have no discretion; they must allocate according to the index components. When MSCI changes its rules, passive funds can only mechanically execute sell orders. This forced selling is entirely different from profit-taking by active investors; it ignores valuation and fundamentals, being purely a technical operation.

MicroStrategy’s situation is the most extreme. About 74.5% of its market value is directly related to its Bitcoin holdings, making it a primary target of MSCI’s new rules. JPMorgan estimates that if MicroStrategy is delisted, it could cause $2.8 billion in capital outflows. This figure only accounts for direct passive fund sales, not including potential chain reactions from active funds worried about liquidity deterioration and following suit.

A broader impact is the effect on the Bitcoin market. MicroStrategy is one of the largest corporate holders of Bitcoin, with its stock price highly correlated to Bitcoin’s price. If MicroStrategy’s stock plunges due to passive sell-offs, the market might interpret this as a worsening outlook for Bitcoin, triggering selling pressure on Bitcoin itself. This transmission from stock markets to crypto markets could amplify the $2.8 billion stock sell-off into a larger Bitcoin market turbulence.

Three Main Arguments Against Industry Opposition to the New MSCI Rules

BitcoinForCorporations’ petition has garnered 1,268 signatures, emphasizing: “A single asset-liability indicator cannot reflect whether a company is still operational. Even if customers, revenue, operations, and business models remain unchanged, the rule could still exclude some companies.” This argument hits the core issue: MicroStrategy is not delisted due to deteriorating business but solely because its asset composition no longer meets MSCI’s new standards.

NASDAQ-listed company Strive urged MSCI on December 5 to “let the market decide” whether companies holding Bitcoin should be included in passive investments. Strive’s stance represents a free-market fundamentalist view: index providers should reflect market reality rather than shape market preferences. If investors truly do not want to hold Bitcoin treasury companies, they can express this through active selling, rather than relying on MSCI to decide for them.

MicroStrategy itself stated in its letter that the proposed policy change would bias MSCI against cryptocurrencies as an asset class, rather than allowing index providers to act as neutral arbiters. This criticism points to MSCI’s core positioning problem. As one of the world’s most influential index providers, MSCI’s influence derives from its neutrality and objectivity. If it begins to adjust rules based on asset class preferences, it could undermine its credibility as an industry standard.

Opponents also argue that MSCI should “withdraw the proposal and continue to classify companies based on their actual business models, financial performance, and operational characteristics.” This classification approach aligns more with traditional corporate analysis logic. Besides Bitcoin treasury holdings, MicroStrategy also has a business intelligence software segment generating cash flow and serving clients. Basing industry classification solely on asset composition ignores its diversified business structure.

Core Reasons Opposing the New MSCI Rules

Unfair Indicator Argument: Relying on a single balance sheet indicator cannot accurately reflect a company’s operational status; excluding companies that have unchanged customers, revenue, and business models is unreasonable.

Neutrality Violation Argument: MSCI should act as a neutral arbiter rather than prejudicing against cryptocurrencies, allowing the market to determine company value.

Misclassification Argument: Companies should be classified based on their actual business models, financial performance, and operational features, not just asset composition.

January 15 Deadline and Market Preparation

MSCI will announce its final decision by January 15, 2026, with the proposed implementation included in the February 2026 index review. This schedule leaves a window for market preparation but also introduces uncertainty. Before the final decision is announced, MicroStrategy and other Bitcoin treasury companies’ stocks may face continued selling pressure, as some funds might choose to exit early to avoid risks.

If MSCI ultimately decides to implement the new rules, the February index rebalancing will trigger concentrated sell-offs by passive funds. Such sell-offs typically occur in the days leading up to the index adjustment, as funds need to complete position adjustments by a specific date. Historical experience shows that concentrated passive fund selling often causes sharp short-term price declines, followed by gradual recovery.

The market is preparing for the worst-case scenario. BitcoinForCorporations’ estimate of $10 billion to $15 billion assumes all 39 companies are delisted; actual impact may depend on MSCI’s final rule specifics. If MSCI sets a higher threshold (e.g., crypto assets exceeding 90% of assets for delisting), the impact will be smaller. Conversely, a lower threshold (e.g., over 50%) would affect more companies.

For MicroStrategy, this is not only a capital outflow issue but also about the legitimacy recognition of its business model. If MSCI delists it, it would be tantamount to declaring that Bitcoin treasury strategies are not accepted by mainstream finance, which could influence other companies’ willingness to adopt similar strategies and impact institutional adoption of Bitcoin.