MSCI's "Not Removed for Now" Conceals a Hidden Message, Strategy Financing Channel Quietly Blocked

On the evening of January 7th, MSCI announced that it would temporarily not remove Strategy and other digital asset treasury companies from its indices. The market cheered, and MSTR’s after-hours gains once exceeded 7%. However, a closer look at MSCI’s full announcement reveals a hidden truth: the newly issued shares will not be included in the index weightings. This “hidden clause” is quietly cutting off the incremental funding source that Strategy relies on.

Looks like good news, but actually a conditional compromise

MSCI’s decision indeed avoided the worst-case scenario. Originally, in the February index review, Bitcoin treasury companies were to be removed from the index. If that had happened, passive funds tracking MSCI indices globally would have been forced to sell these companies’ stocks, triggering a stampede of sell orders. This risk has now been temporarily alleviated.

But MSCI hasn’t fully let go. They’ve made a subtle cut:

This difference may seem subtle, but for Strategy’s financing model, it’s fatal.

The cut-off of the “infinite funding cycle”

To understand the power of this hidden clause, you need to grasp Strategy’s financing logic. Its business model is quite simple:

• Continuously issue new shares via ATM (automatic issuance mechanism)
• Use the proceeds to buy Bitcoin, enhancing the “Bitcoin treasury” appeal
• Passive funds, because Strategy is in the MSCI index, must automatically buy the new shares according to their weight
• When new shares are included in the index weight, it triggers more passive fund buying
• Creates a self-reinforcing funding cycle

This cycle relies on a key premise: new shares must be included in the MSCI index. Once this condition is removed, the entire logic collapses.

According to the latest news, MSCI explicitly stated that “no increase in the number of shares (NOS) for this security will be executed.” This means that even if Strategy continues issuing new shares, these will not trigger forced buying by passive funds. The financing capacity will be greatly reduced.

Why the market is confused

The reason MSTR’s after-hours rise of up to 7% happened is that the market focused on the surface message of “not being removed for now.” Analyst reactions are also quite representative.

Benchmark analyst Mark Palmer sees this as “a welcome breather,” while TD Cowen’s Lance Vitanza said, “It’s still uncertain whether this means a victory for the defensive side or just a temporary delay.” Both perspectives overlook the true meaning of the hidden clause.

This actually reflects a market psychology: short-term positive news can mask long-term structural issues. Strategy has indeed avoided the worst outcome of being kicked out of the index, but the incremental funding source has been permanently cut off.

Other Bitcoin treasury companies are also in trouble

This hidden clause not only affects Strategy. According to recent reports, other Bitcoin treasury companies like Metaplanet and Capital B are also impacted. This means the entire financing model of Bitcoin treasury companies faces a redesign.

If previously the “index premium” provided a continuous source of passive funds, now it becomes “index protection”—only ensuring they won’t be kicked out, but no longer supporting incremental financing.

Summary

MSCI’s decision is a clever political compromise. It satisfies the market’s demand to “not be kicked out” while redefining the rules through the hidden clause. Strategy appears to have dodged a bullet, but in reality, it has lost its most critical accelerator for financing.

In the short term, MSTR’s stock price may continue to rise due to avoiding removal. But in the long term, Strategy will need to find new ways to finance its Bitcoin purchases. The true impact of this hidden clause may only become fully apparent when Strategy launches its next financing round.