Is Strategy's index removal countdown an opportunity or a trap? The key lies in whether the "financing flywheel" can keep spinning.

BlockBeats news, October 20 — Market analyst Murphy stated that on October 15, MSCI officially approved new rules to exclude non-operating companies that do not meet standards from its global investable market indices. In earlier simulated screenings, MSTR (Strategy) was already included in the proposed removal list, with the final result to be announced on November 11 and effective on November 30. Following the announcement, MSTR dropped sharply. Funds tracking the relevant indices currently hold about 13 million MSTR shares, worth nearly $1.8 billion, equivalent to 60% of its 30-day average daily trading volume. Although this passive selling pressure is large, it is not impossible to absorb; what is truly worth watching is where future active demand will come from. Now that BTC spot ETFs are quite mature, why would investors not buy the ETF directly, but instead bear additional management fees, financing costs, and share dilution risk to buy a company that only holds BTC? Strategy must prove that it can use capital operations to keep net BTC equity per share growing.

This leads to the core logic of MSTR's "financing flywheel." Suppose the company holds 100 BTC and issues 100 shares, with each share corresponding to 1 BTC. If the market gives a 1.5x premium (mNAV), issuing 20 additional shares would raise funds equivalent to 30 BTC. After buying, holdings rise to 130 BTC, total shares become 120, and BTC per share rises to 1.083. Even if the BTC price remains unchanged, old shareholders' equity increases. But the flywheel has two prerequisites: the market must be willing to give a sufficient premium, and premium contraction must not offset equity growth. Therefore, MSTR's investment return depends on three variables: the BTC price, net BTC equity per share, and mNAV (the premium the market is willing to pay).

Based on these three variables, MSTR has three future paths.

Path 1: BTC rises and mNAV expands in tandem; MSTR will gain both asset appreciation and valuation expansion, clearly outperforming BTC.

Path 2: BTC rises but mNAV remains low; MSTR may still outperform thanks to capital amplification and growth in equity per share, but excess returns would come only from asset appreciation.

Path 3: BTC rises but mNAV continues to compress; if equity growth cannot offset valuation contraction, MSTR will underperform BTC.

In July this year, Strategy revised the mNAV calculation basis; as of the October 16 close it was 1.08x, a relatively limited premium. Ultimately, buying BTC is about positioning for the long-term value of the asset itself, while buying MSTR adds a layer of recognition of Saylor's capital management capability.