$8.8 Billion Outflow Countdown: MSTR Is Becoming the Outcast of Global Index Funds

Recently, Bitcoin has plunged, and MicroStrategy is also having a tough time.

MSTR’s stock price dropped from a high of $474 to $177, a 67% decline. In the same period, Bitcoin fell from $100,000 to $85,000, a 15% drop.

What’s even more critical is the mNAV, i.e., the premium of market value relative to Bitcoin net asset value.

At its peak, the market was willing to pay $2.5 for every $1 of Bitcoin held by MSTR. Now, that number is $1.1—almost no premium left.

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

Why did this happen?

Of course, one reason is the recent sharp drop in Bitcoin. But the fact that MSTR has fallen so much more than BTC is driven by an even bigger fear:

MSTR may be kicked out of major global stock indices.

In simple terms, there are trillions of dollars in global funds that are “passive investors.” They don’t pick stocks; they mechanically buy all the components in an index.

If you’re in the index, that money automatically buys you; if you’re kicked out, that money must sell you—no negotiation.

This decision lies in the hands of a few large index companies, of which MSCI is the most important.

Now, MSCI is considering a question: when 77% of a company’s assets are Bitcoin, is it still a normal company? Or is it actually a Bitcoin fund disguised as a public company?

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

For a company that survives by printing stock to buy Bitcoin, this is almost a death sentence.

When Passive Funds Can’t Buy MSTR

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

Trillions of dollars in global pension funds, sovereign wealth funds, and ETFs track indices compiled by MSCI. These funds don’t do research or look at fundamentals; their task is to completely replicate the index—whatever’s in the index, they buy; whatever’s not, they don’t touch.

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 regarded as a “normal listed company”?

On October 10, MSCI released an official consultation document. The logic is straightforward: companies holding large amounts of Bitcoin are more like investment funds than “operating businesses.” And investment funds have never been allowed into stock indices. Just as you wouldn’t put a bond fund in a tech stock index.

What’s MicroStrategy’s current situation? As of November 21, the company held 649,870 Bitcoins, worth about $5.67 billion at current prices. The company’s total assets are about $7.3–7.8 billion. Bitcoin proportion: 77–81%.

Far above the 50% red line.

Worse, CEO Michael Saylor never hides his intentions.

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

What will happen if they’re kicked out?

According to a November 20 JPMorgan research report, if MSTR is only removed by MSCI, it will face about $2.8 billion in passive fund outflows. But if other major index providers (Nasdaq, Russell, FTSE, etc.) follow, total outflows 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 collectively hold about $9 billion in MSTR stock.

Once excluded, these funds must sell. They have no choice—this is written into their fund charter.

What does $8.8 billion mean? MicroStrategy’s average daily trading volume is about $3–5 billion, but that includes a large amount of high-frequency trading. If $8.8 billion in one-way selling pressure is unleashed in a short time, it’s equivalent to two or three days of nothing but sell orders.

Note, MSTR’s average daily trading volume is $3–5 billion, including high-frequency trading and market maker liquidity. $8.8 billion in one-way selling is equivalent to 2–3 days where all trading is selling. The bid-ask spread will widen from the current 0.1–0.3% to 2–5%.

History tells us index adjustments are ruthless.

When Tesla was included in the S&P 500 in 2020, trading volume jumped to 10 times normal in a single day. The reverse is also true—when General Electric was kicked out of the Dow Jones in 2018, its stock fell another 30% in the month after the news.

December 31, the consultation period ends. On January 15 next year, the formal decision will be announced. Based on current MSCI consultation document rules, exclusion is almost certain.

The Buy-Bitcoin-with-Stock Flywheel Is Stuck

MicroStrategy’s core strategy over the past five years can be simplified to a loop: issue stock to raise funds → buy Bitcoin → stock price rises → issue more stock.

The prerequisite for this loop to operate is that the stock must have a premium. If the market is willing to pay $2.5 (mNAV=2.5x) for every $1 of Bitcoin held by the company, issuing new shares to buy Bitcoin creates value.

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

At its 2024 peak, MicroStrategy’s mNAV did hit 2.5x, even briefly touching 3x. Reasons for the premium included Saylor’s execution, first-mover advantage, and the convenience for institutions to indirectly hold Bitcoin.

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

The market may already be pricing in MicroStrategy’s potential removal from MSCI.

Once kicked out of major indices, MicroStrategy will go from being a mainstream stock to a niche Bitcoin investment vehicle. A case in point is Grayscale Bitcoin Trust (GBTC), which moved from a 40% premium to a long-term 20–30% discount after better Bitcoin ETFs appeared.

When mNAV approaches 1, the flywheel stops spinning.

Issue $10 billion in new stock, buy $10 billion in Bitcoin, and the company’s total value doesn’t change. It’s just moving money from one hand to the other, creating nothing but dilution for existing shareholders.

Debt financing is still an option—MicroStrategy has issued $7 billion in convertible bonds. But debt needs to be repaid, and as the stock price drops, convertibles become a pure debt burden, not quasi-equity.

Saylor’s Response and Market Views

Faced with the threat of possible exclusion by MSCI, Michael Saylor responded in his usual style.

On November 21, he posted a long article on X. His core view: MicroStrategy is not a fund, not a trust, and not a holding company. He used artful language to sidestep MSCI’s definition:

“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 only passively hold assets, while MicroStrategy is “creating, building, issuing, and operating.” This year, the company completed five public offerings of digital credit securities: STRK, STRF, STRD, STRC, and STRE.

His implication: we’re not just hoarding Bitcoin—we’re engaging in complex financial operations.

But the market doesn’t seem to care about these arguments.

MSTR’s stock price has already decoupled from Bitcoin—not just a lower correlation, but actually performing worse than Bitcoin. This likely reflects market concerns about its index status.

Cycle Capital partner Joy Lou pointed out in a post that after a stock is excluded, its average daily trading volume could plunge 50–70% within 90 days.

What’s even more critical is the debt problem. MSTR has $7 billion in convertible bonds, with conversion prices ranging from $143 to $672. If the stock falls to the $180–200 range, debt pressure will increase sharply.

Her conclusion is pessimistic. Once liquidity dries up, the risk of MSTR falling below $150 increases dramatically.

Other community analysts are also pessimistic. For example, after MSTR is removed from indices, ETFs will automatically sell, the stock will fall, dragging Bitcoin down, creating a vicious “Davis double kill” cycle.

“Davis double kill” refers to a sharp drop in stock price caused by a decline in both valuation and net profit per share.

Interestingly, these analysts all mention one word: passive.

Passive selling by passive funds, passive triggering of debt clauses, passive loss of liquidity. MSTR has gone from being an active Bitcoin pioneer to a passive victim of the rules.

Market consensus is becoming clearer: this is not about Bitcoin’s price, but about the rules of the game changing.

In recent interviews, Saylor still insists he will never sell Bitcoin. MSTR proved that companies can go all-in on Bitcoin, but the MSCI index may be proving that the price for doing so is being exiled from the mainstream market.

Under the 50% Red Line, Is DAT Still a Good Business?

MicroStrategy isn’t the only public company holding large amounts of Bitcoin. According to MSCI’s preliminary list, 38 companies are under observation, including Riot Platforms, Marathon Digital, Metaplanet, etc. They’re all watching to see what happens on January 15.

The rule is clear: 50% is the red line. If you exceed it, you’re a fund, not a company.

This draws a clear boundary for all DAT companies: either keep crypto holdings below 50% to stay mainstream, or exceed 50% and accept being exiled.

There’s no middle ground. You can’t both enjoy passive buying from index funds and turn yourself into a Bitcoin fund. MSCI’s rules don’t allow this kind of arbitrage.

This is a blow to the whole corporate crypto asset strategy.

For years, Saylor has been preaching, convincing other CEOs to put Bitcoin on their balance sheets. MSTR’s success (the stock once rose tenfold) was the best advertisement, but now that ad is coming down.

In the future, companies wanting to hold large amounts of Bitcoin may need new structures, such as:

• Setting up an independent Bitcoin trust or fund
• Indirectly holding Bitcoin through Bitcoin ETFs
• Keeping holdings safely below the 49% “safety line”

Of course, some believe this is a good thing. Bitcoin shouldn’t depend on a company’s financial engineering. Let Bitcoin be Bitcoin, let companies be companies—each to their own.

Five years ago, Saylor pioneered the corporate Bitcoin strategy. Five years later, it looks like this may be ended by a boring financial document. But maybe this isn’t the end, but a catalyst for the market to evolve new models.

Because of MSCI’s 50% red line, MicroStrategy won’t go bankrupt, and Bitcoin won’t go to zero. But the era of unlimited “printing stock to buy Bitcoin” is over.

But for investors still holding MSTR and various DAT company stocks: are you bullish on Bitcoin, or on Saylor the person? If it’s the former, why not just buy Bitcoin or an ETF?

After being kicked out of indices, MSTR will become a niche investment. Liquidity will fall, volatility will rise. Can you accept that?

The final result will be revealed on January 15, 2026, but the market is already voting with its feet.