Strategy stock falls 10% as Michael Saylor's bitcoin giant faces index-level threat

Strategy ( MSTR ) stock fell nearly 10% Friday, the bitcoin accumulator's worst single-day decline since February.

The move comes after index provider MSCI announced new eligibility rules that could lead to the removal of Michael Saylor's bitcoin juggernaut from its global stock indexes.

MSCI said Thursday it will adopt new rules to exclude certain "non-operating companies" from its indexes, including those whose primary business resembles that of an investment fund rather than a traditional operating company.

Exclusion could include Strategy, the world's largest corporate holder of bitcoin, along with other digital asset treasury companies. Such an action is expected to force index-tracking funds to sell shares of affected companies.

MSCI said it will publish a final list of affected companies on Nov. 11, with the new rules taking effect after the market closes on Nov. 30.

Strategy, led by executive chair Saylor, had previously criticized the proposal as discriminatory against digital asset treasury companies. The company currently holds about 4% of bitcoin's total supply.

On the other hand, Fundstrat head of digital asset strategy Sean Farrell doesn't see Strategy's potential elimination from the index as a significant worry.

"I still think the market can absorb the associated flows," Farrell wrote late Thursday to clients, estimating that selling across MSCI-linked products amounts to "around $2 billion."

"The market has had months to prepare for this outcome. Strategy itself issued more than $2 billion of common stock in August," Farrell added.

Bitcoin's price ( BTC ) fell slightly Friday morning.

David Hollerith covers a range of developments throughout the financial sector, from Wall Street to banking and asset management to crypto and fintech. Email him at david.hollerith@yahoofinance.com. Follow him on X at @DsHollers.