Strategy's Bitcoin Loss Deepens to $6.85B as MSCI Confirms MSTR Index Removal
Key Takeaways
- •Strategy disclosed holdings of 850,364 BTC acquired at an average price of $75,456 per coin, and with Bitcoin sliding toward $67,400 the $64.2 billion treasury was roughly $6.85 billion under water, an unrealized decline of about 10.7%.
- •MSCI will delete Strategy's Class A shares from the MSCI USA, World, and ACWI indexes after the market close on November 30 under new eligibility rules screening out firms resembling investment vehicles, a classification Strategy disputes by arguing its Bitcoin treasury and digital-credit products constitute an active business.
- •Funds tracking MSCI indexes hold approximately 13 million MSTR shares, about 3.1% of shares outstanding and worth roughly $1.45 billion at Friday's close of $111.62, though an earlier JPMorgan estimate projected as much as $2.8 billion in potential selling before MSCI's final methodology.
- •Strategy manages roughly $12.95 billion in preferred equity and $6.71 billion in debt against about $4.9 billion in dollar-denominated assets, with annual dividend and interest obligations near $1.46 billion covered for approximately 3.4 years by a $4.77 billion USD Reserve.
- •During the week ended November 8, Strategy raised $283.8 million by selling about 2.05 million shares, directing $81.9 million to the purchase of 1,036 BTC at an average price of $79,012, $188.3 million to STRC repurchases, and $13.6 million to USD Cash.
Strategy's $64.2 billion Bitcoin treasury was roughly $6.85 billion under water early Saturday, after the cryptocurrency slid toward $67,400, while index provider MSCI confirmed that the company will be removed from its major equity benchmarks at the end of November.
In its latest SEC filing, the Michael Saylor-led company disclosed holdings of 850,364 BTC acquired at an average price of $75,456 per coin. At $67,400, that stash is worth approximately $57.3 billion, leaving an unrealized decline of about 10.7% against the aggregate purchase cost. At that holding size, each $1,000 move in Bitcoin's price shifts the value of the stash by roughly $850 million, making the spread between the market price and the $75,456 cost basis a direct gauge of how the unrealized gap widens or narrows.
The deepening loss follows Strategy's most recent acquisition of 1,036 BTC for $81.9 million during the week ended November 8. Those coins carried an average price of $79,012, above both the company's overall cost basis and the current market level.
MSCI Removal Raises Passive Selling Concerns
Under its November index review, MSCI will delete Strategy's Class A shares from the MSCI USA Index, with the change taking effect after the market close on November 30. The removal extends to global benchmarks that incorporate US constituents, including MSCI World and MSCI ACWI. Because benchmark changes take effect on a fixed date, funds tracking the affected indexes have a defined window ending November 30 to align their portfolios with the new composition.
The move follows new eligibility rules targeting companies classified as non-operating. The framework assesses operating assets and five financial ratios, screening out firms that qualify as resembling investment vehicles rather than conventional operating businesses.
Strategy disputed the classification, contending that its Bitcoin treasury and digital-credit products amount to an active business. That classification question is what the eligibility test turns on, shaping the company's benchmark treatment in future reviews. According to the company's estimate, funds tracking MSCI indexes hold approximately 13 million MSTR shares, representing 3.1% of shares outstanding and less than one day of average trading volume.
An earlier JPMorgan estimate projected roughly $2.8 billion in potential selling, although that forecast predates MSCI's final methodology and the recent decline in Strategy's share price. At Friday's closing price of about $111.62, the 13 million shares identified by Strategy would be worth roughly $1.45 billion. Actual fund outflows will hinge on index-tracking exposure and portfolio rebalancing rather than the historical estimate alone.
Preferred Stock Obligations Add to Liquidity Questions
The mounting pressure arrives as Strategy manages approximately $12.95 billion in preferred equity and $6.71 billion in debt against roughly $4.9 billion in dollar-denominated assets. A $4.77 billion USD Reserve backs preferred-stock dividends and debt interest, while $146.2 million in USD Cash remains available for broader capital management.
Annual dividend and interest obligations run near $1.46 billion, providing approximately 3.4 years of coverage at the current payment rate. The outstanding preferred equity, however, does not represent an equivalent sum immediately payable from those reserves.
Strategy previously reported $19.53 billion in third-quarter net income, driven largely by $20.91 billion in digital-asset fair-value gains. Those gains were predominantly unrealized and did not generate matching cash receipts. The same fair-value accounting works in both directions: with Bitcoin trading below the company's average cost, unrealized declines now weigh on reported results without requiring cash outlays.
The company has continued managing capital through equity issuance and preferred-share repurchases. During the week ended November 8, it raised $283.8 million by selling approximately 2.05 million MSTR shares, directing $81.9 million to Bitcoin purchases, $188.3 million to STRC repurchases, and the remaining $13.6 million to USD Cash. The November 30 effective date and the company's successive SEC filings provide the concrete markers for tracking how the benchmark and liquidity pressures develop.
