MicroStrategy faces risk of exclusion from MSCI indexes and possible outflow of $8.8 billion

Source: PortaldoBitcoin Original Title: Strategy at risk of being removed from MSCI indexes and facing outflows of $8.8 billion Original Link: MicroStrategy, the world’s largest corporate holder of Bitcoin, is in talks with MSCI regarding a decision that could exclude it from its indexes, the company’s founder Michael Saylor told Reuters on Wednesday.

According to a JPMorgan report, index provider MSCI is expected to make a decision about the reshuffle on January 15. If it proceeds with the removal and other index providers follow suit, MicroStrategy could face outflows of up to $8.8 billion from its shares, as projected by JPMorgan.

MicroStrategy is currently part of the MSCI USA and MSCI World indexes, with a portion of its market value tied to benchmarks through passive products such as ETFs. JPMorgan stated in its report that an exclusion would raise concerns about the company’s costs and its ability to raise capital through equity and debt offerings in the future.

Asked whether the company was in discussions with MSCI, Saylor said: “we are participating in that process,” adding he was “not sure” whether JPMorgan’s numbers regarding capital outflows were accurate.

Regarding the drop in MicroStrategy’s shares, Saylor pointed out that the company will always have a stronger move than Bitcoin. “The value of the shares will be volatile because the company is built on amplified Bitcoin. If Bitcoin falls 30%, 40%, then the share price will fall more, because the share price was built to fall,” he said.

After hitting an all-time high of $126,000 in October, Bitcoin dropped sharply and even fell below the $90,000 level. In this scenario, MicroStrategy’s shares are down more than 37% year-to-date.