The cryptocurrency market has plummeted, and Strategy may face delisting from the Nasdaq 100 and other indices, potentially losing billions of dollars in funds

Michael Saylor's Strategy is facing the risk of being removed from mainstream benchmark indices such as the MSCI US Index and the Nasdaq 100 Index. This week, JPMorgan Chase analyst Nikolaos Panigirtzoglou warned in a report that Strategy may lose its position in benchmarks like the MSCI US and Nasdaq 100. The research report pointed out: Although active managers are not obligated to follow index changes, being removed from major indices will undoubtedly be seen as a negative signal by market participants. According to the report, if MSCI decides to remove it, this alone could lead to capital outflows of up to $2.8 billion, and if other index providers follow suit, the scale of outflows could further expand. Currently, the passive fund exposure related to the company is close to $9 billion. Previously, on October 10, MSCI stated that some market participants pointed out that digital asset treasury companies may be more similar to investment funds, which typically do not meet the inclusion criteria for indices. Therefore, MSCI proposed to exclude companies with digital asset holdings accounting for 50% or more of total assets from its global investable market indices. The final decision regarding index inclusion is expected to be made by January 15. For a company that rose by packaging cryptocurrency exposure into stock codes, being removed from the index is a blow that goes far beyond liquidity. This move would substantially weaken its institutional credibility, which it once relied on to attract mainstream portfolios, and mark a reversal of its growth momentum. On Thursday, Strategy's stock price fell more than 5%, and it has plummeted over 60% since hitting a record high last November, with its market value premium over the value of its holdings nearly disappearing. Bitcoin also fell more than 7% from its daily high on Thursday, reaching its lowest level in seven months. Business Model Under Test The rise of Strategy is built on a flywheel effect: selling stocks, buying Bitcoin, enjoying the upswing, and repeating the process. At its peak, the company's market value far exceeded the value of its held assets. However, this premium has now largely disappeared, and the company's valuation is only slightly above its cryptocurrency reserves, indicating that investor confidence is rapidly waning. Nevertheless, since Saylor announced the first purchase of Bitcoin in August 2020, the stock has still risen over 1300%, outperforming all major stock indices. Just a few months ago in September, cryptocurrency optimists were betting that Strategy might soon be included in the S&P 500 Index, as its market value, profitability, and trading liquidity were then seen as meeting the qualification thresholds. The company currently still holds nearly 650,000 Bitcoins and continues to issue preferred shares to increase its holdings, but the market is no longer rewarding based solely on narrative According to Wallstreetcn, the company's enterprise value to Bitcoin holdings ratio (mNAV) once collapsed to about 0.95 times, marking the first time in the company's history that its market value fell below its Bitcoin holdings. Financing Pressure Highlights Vulnerability The sell-off has affected Strategy's newer financing tools. The price of the company's perpetual preferred shares has plummeted, with the yield on the preferred shares issued in March this year at a coupon rate of 10.5% rising to 11.5%. A rare euro-denominated preferred share issuance launched earlier this month fell below its already discounted issue price in less than two weeks. Michael Youngworth, head of global convertible bond strategy at Bank of America Global Research, stated: The premium has collapsed in recent weeks. This has made financing somewhat challenging. These financing pressures highlight the extent to which Strategy's business model relies on confidence and how quickly that confidence can erode. Strategy helped define the "digital asset reserve" model, but this business model is now showing its limitations. Peer companies are selling tokens to maintain liquidity or taking on more debt to delay the moment of liquidation. What was once seen as a phenomenon of institutional adoption now appears more like a mechanically fragile structure