MicroStrategy faces selling pressure: MSCI may remove it in February

In mid-January, MSCI will announce its final decision regarding the removal of bitcoin-holding companies from its indices, with MicroStrategy being the most notable case. TD Cowen’s experts warn that if this decision is implemented, the market could see a large-scale passive capital outflow.

Selling pressure could reach up to $8.8 billion

JPMorgan has calculated the potential consequences in detail. If MicroStrategy is removed from MSCI indices, passive fund outflows could amount to $2.8 billion from funds tracking this index alone. If other indices like S&P follow suit, the total withdrawal could reach up to $8.8 billion. With MicroStrategy’s current market capitalization just under $5.9 billion, such a forced sell-off on this scale would significantly impact the stock price.

MSTR stock has weakened sharply

In recent months, MicroStrategy’s stock has fallen over 60% since November last year, weakening more than bitcoin itself. The ratio between the aggregate value and the number of bitcoins the company holds has dropped to just over 1.1, the lowest since the pandemic began. Today, the stock rose more than 4% to $177.47, but concerns remain unalleviated.

Is MSCI based on standards or bias?

TD Cowen questions the fairness of this decision. MicroStrategy is not a pure trust or holding company but a real operating business with a $500 million software division. Additionally, the company develops unique bitcoin-backed credit products. Removing the company solely because of its focus on bitcoin seems like a hasty judgment rather than a clear classification standard.

Michael Saylor remains undeterred

Chairman Michael Saylor continues to assert that the company is a complete business with real operations. He has repeatedly emphasized bitcoin credit tools such as $STRK and $STRC, which offer yields 2-4% higher than traditional credit products.

In the long term, Saylor envisions accumulating $1 trillion worth of bitcoin, creating a massive digital collateral asset pool. He believes other financial institutions could adopt this model to develop safer credit services with superior collateral.

Long-term outlook remains relatively optimistic

Despite recent volatility, TD Cowen maintains a positive outlook. They estimate that by 2027, MicroStrategy could hold up to 815,000 BTC. At that level, the intrinsic value of bitcoin per share could support a target price of $585, about 170% higher than the current level.

Cowen suggests that the recent weakness is due to market volatility and index concerns, not flaws in the core bitcoin accumulation strategy. If included in the S&P 500 or if bitcoin regulations become clearer, capital inflows into the stock could stabilize.

Bitcoin at $90.61K – Correction or long-term trend?

Currently, bitcoin trades around $90,610, down 0.12% in 24 hours. This price has declined significantly from the October peak of $126,000. Traders should watch the support zone at $84,000. If the price drops below that, weaker support lies at $75,000, with stronger buying zones between $72,000 and $69,000. A deeper correction targets the $57,700 level (Fibonacci 0.618).

Interestingly, despite bitcoin’s decline, MicroStrategy continues large-scale purchases, now holding over 3% of the total bitcoin supply. This action reflects the company’s confidence in the long-term value of digital assets, despite short-term headwinds.

Conclusion

MSCI’s potential pressure is a real risk to prepare for, but it is not the end of MicroStrategy’s story. The market may experience short-term volatility, but the long-term adoption trend of bitcoin remains unchanged. Investors should balance short-term concerns with the long-term opportunities this company is building.