Strategy Inc., the company formerly known as MicroStrategy, has paused its relentless accumulation of Bitcoin, signaling a critical test for its pioneering digital asset treasury model. This halt in purchases coincides with a sharp decline in its stock price and growing investor concerns over its future as a publicly-traded Bitcoin proxy.
The Weight of Index Exclusion
A primary threat looming over Strategy is the potential for removal from major stock indices. Global index provider MSCI is reviewing whether to exclude companies whose balance sheets hold more than 50% of their assets in cryptocurrencies. With Bitcoin making up roughly 77% of Strategy’s assets, it sits well above this proposed threshold.
The financial implications of exclusion are significant. JPMorgan analysts estimate that removal from MSCI indices alone could trigger $2.8 billion in forced selling of Strategy’s stock by passive funds that track these benchmarks. If other index providers like Nasdaq were to follow suit, the total outflow could reach a staggering $8.8 to $11.6 billion. This overhang has contributed to the stock’s severe underperformance, with shares falling significantly from their 2025 peak.
A Compromised Financial Engine
The pause in buying also stems from a breakdown in the core financial mechanism that fueled Strategy’s strategy. For years, the company leveraged its high stock price, which traded at a premium to the value of its Bitcoin holdings (a metric known as mNAV), to raise cheap capital. It would issue new shares or debt and use the proceeds to buy more Bitcoin, a model that worked as long as the premium existed.
However, that premium has now collapsed. Strategy’s mNAV ratio fell from a historical high of 2.66 to as low as 1.1, at one point even trading below the value of its Bitcoin. With the premium gone, Strategy lost its ability to raise capital cheaply, removing the fuel for its acquisition engine and making its stock less attractive to investors.
A Shift in Investor Preference
Compounding these issues is a fundamental shift in how institutions access Bitcoin. The recent approval of U.S. spot Bitcoin Exchange-Traded Products (ETPs) has provided a regulated, liquid, and direct alternative to gaining Bitcoin exposure. These products have been immensely successful, now holding over $175 billion in on-chain crypto assets.
For many investors, buying a spot Bitcoin ETP is now preferable to buying Strategy’s stock. The ETP offers pure Bitcoin exposure without the additional corporate risks, such as Strategy’s debt load, management decisions, or the threat of index exclusion. This has led to a rebalancing of institutional capital away from complex proxies and toward these simpler, purpose-built vehicles.
The Road Ahead
Strategy’s immediate future hinges on the MSCI decision expected on January 15, 2026. A favorable outcome could stabilize its position, while an exclusion would force the company to navigate a new financial reality without the support of passive index funds.
This situation serves as a case study in the maturation of the crypto market. It underscores the risks of using a corporate equity as a crypto proxy and highlights the importance of evaluating the costs, liquidity risks, and structural complexities involved, especially when simpler and more direct alternatives are readily available.
