Analysis: MSCI temporarily does not remove the Strategy, but implementing a freeze mechanism weakens the index's capital inflow effect

On January 8, the global stock and ETF market benchmark provider MSCI announced that it will temporarily not remove Bitcoin treasury company Strategy. However, MSCI has also implemented a technical freeze on the number of shares of these companies. MSCI explained: “MSCI will not implement increases in the number of shares (NOS), foreign inclusion factors (FIF), or local inclusion factors (DIF) for these securities. At the same time, MSCI will also delay the addition or reclassification adjustments for all securities on the preliminary list.” Through this decision, MSCI effectively cuts off the link between new equity issuance and passive index fund automatic buying. This move means that the downward risk of “forced selling” triggered by passive funds in the index mechanism is removed, but at the same time, the “upward driving mechanism” inherent in index trading is also dismantled. Due to MSCI’s technical freeze blocking automatic index fund purchases, Strategy will have to turn to active investors to obtain new funding in the future, which also poses a challenge to its reliance on continuous financing to increase Bitcoin holdings.