Subscribe to Penelope
PenelopeThe Security Advantages of Monad
Background: Ethereum's Gas ModelIn the past three years, more than four billion dollars' worth of assets have been stolen due to on - chain vulnerabilities. These losses have become one of the biggest obstacles to the mainstream adoption of decentralized applications (DApps). The main reason is that the cost of implementing security measures for smart contracts on Ethereum is very high. While minimizing users' gas fees, Ethereum developers often face a difficult trade - off as they have to gi...
PenelopeStepping into the Spotlight: Crypto Founders and Brand Leverage
Claire Kart: Tech marketers often work behind the scenes, which is effective in many cases. However, in the crypto industry, technical founders are often silent, causing the team to miss opportunities for exposure. In this nascent industry, finding the right talent is like finding a needle in a haystack. That's why I chose to step into the spotlight. The crypto space particularly relies on marketing and community building, and users want to hear from executives. Recruitment is also challengin...
PenelopeTrump Takes Charge, Yet “Crypto Week” Stumbles
Tuesday’s procedural vote in the House ended 196–223, with thirteen Republican representatives joining Democrats to block the rule that would have allowed debate and advancement of the three crypto bills. Unless the House revises its rules, the legislation—hailed as the industry’s best chance at regulatory clarity—will stall before reaching substantive discussion. The Vision: Trump’s Personal Push Earlier in the week, Washington’s crypto circles were elated. Industry players expected smooth s...
<100 subscribers
Support Penelope
Penelope$8.8 billion exit countdown: is MSTR about to be dropped by global index funds?
Subscribe to Penelope
<100 subscribers
Support Penelope
Penelope$8.8 billion exit countdown: is MSTR about to be dropped by global index funds?
PenelopeThe Security Advantages of Monad
Background: Ethereum's Gas ModelIn the past three years, more than four billion dollars' worth of assets have been stolen due to on - chain vulnerabilities. These losses have become one of the biggest obstacles to the mainstream adoption of decentralized applications (DApps). The main reason is that the cost of implementing security measures for smart contracts on Ethereum is very high. While minimizing users' gas fees, Ethereum developers often face a difficult trade - off as they have to gi...
PenelopeStepping into the Spotlight: Crypto Founders and Brand Leverage
Claire Kart: Tech marketers often work behind the scenes, which is effective in many cases. However, in the crypto industry, technical founders are often silent, causing the team to miss opportunities for exposure. In this nascent industry, finding the right talent is like finding a needle in a haystack. That's why I chose to step into the spotlight. The crypto space particularly relies on marketing and community building, and users want to hear from executives. Recruitment is also challengin...
PenelopeTrump Takes Charge, Yet “Crypto Week” Stumbles
Tuesday’s procedural vote in the House ended 196–223, with thirteen Republican representatives joining Democrats to block the rule that would have allowed debate and advancement of the three crypto bills. Unless the House revises its rules, the legislation—hailed as the industry’s best chance at regulatory clarity—will stall before reaching substantive discussion. The Vision: Trump’s Personal Push Earlier in the week, Washington’s crypto circles were elated. Industry players expected smooth s...
Share Dialog
Share Dialog
1. A 67 % share-price drop that dwarfs BTC’s 15 % slide
MicroStrategy (MSTR) has fallen from $474 to $177 (-67 %) while Bitcoin slipped only 15 % from $100 k to $85 k.
The market’s willingness to pay a premium for its BTC vault has evaporated: mNAV (market-cap / net-asset-value) has compressed from 2.5 × to barely 1.1 ×.
The “issue shares → buy coins → stock rallies → repeat” flywheel is now a zero-sum game.
2. The sword hanging over the stock: MSCI’s 50 % rule
MSCI—gatekeeper of the world’s most-tracked equity benchmarks—labels any company whose digital-asset holdings exceed 50 % of total assets as an “investment fund”, making it ineligible for standard equity indices.
MSTR’s balance-sheet is 77 % Bitcoin (~$56 bn of $73 bn total assets), squarely above the threshold .
If MSCI pulls the plug on 15 Jan 2026, passive vehicles tracking MSCI USA, Nasdaq-100 and Russell 2000 must divest roughly $28 bn of stock; add parallel reviews by FTSE/Russell and Nasdaq and the total forced selling could reach $88 bn .
With average daily turnover of ~$48 bn, an $88 bn one-way liquidation would equal almost two full days of volume—enough to blow out bid-ask spreads from 0.2 % to 2-5 %.
3. Precedent: from flagship to orphan
History shows index removals are merciless.
When GE was dropped from the Dow in 2018 the stock fell another 30 % in the following month; when Grayscale’s GBTC lost its ETF monopoly it flipped from a +40 % premium to a –30 % discount and never recovered.
Analysts already price in a post-index liquidity discount: MSTR now trades roughly at par to its BTC stash, a level that removes any accretion from future equity issuance.
4. Saylor’s defence—and the market’s reply
CEO Michael Saylor argues MSTR is an operating business (“a $500 m software company that happens to own Bitcoin”) and points to five listed digital-security offerings as proof of active treasury engineering .
Investors are unmoved: the stock’s beta to BTC has actually risen above 2.5 as traders hedge the potential index exile.
Meanwhile $7 bn of convertibles with strike prices between $143 and $672 begin to look like pure debt if the share price stays sub-$180, raising the spectre of a “double-dip” where both valuation and earnings-per-share metrics deteriorate simultaneously.
5. Red-line anxiety spreads to the DAT pack
MSCI has put 38 crypto-heavy issuers on watch; together they control >1 % of the free-float value of global small-cap indices.
The message is binary: stay under 50 % and keep the passive bid, or cross the line and live in the liquidity wilderness.
For the broader “print-shares-buy-coins” industry, the free lunch appears to be over—five years after Saylor invented it, a footnote in an index methodology file may finish it off .
1. A 67 % share-price drop that dwarfs BTC’s 15 % slide
MicroStrategy (MSTR) has fallen from $474 to $177 (-67 %) while Bitcoin slipped only 15 % from $100 k to $85 k.
The market’s willingness to pay a premium for its BTC vault has evaporated: mNAV (market-cap / net-asset-value) has compressed from 2.5 × to barely 1.1 ×.
The “issue shares → buy coins → stock rallies → repeat” flywheel is now a zero-sum game.
2. The sword hanging over the stock: MSCI’s 50 % rule
MSCI—gatekeeper of the world’s most-tracked equity benchmarks—labels any company whose digital-asset holdings exceed 50 % of total assets as an “investment fund”, making it ineligible for standard equity indices.
MSTR’s balance-sheet is 77 % Bitcoin (~$56 bn of $73 bn total assets), squarely above the threshold .
If MSCI pulls the plug on 15 Jan 2026, passive vehicles tracking MSCI USA, Nasdaq-100 and Russell 2000 must divest roughly $28 bn of stock; add parallel reviews by FTSE/Russell and Nasdaq and the total forced selling could reach $88 bn .
With average daily turnover of ~$48 bn, an $88 bn one-way liquidation would equal almost two full days of volume—enough to blow out bid-ask spreads from 0.2 % to 2-5 %.
3. Precedent: from flagship to orphan
History shows index removals are merciless.
When GE was dropped from the Dow in 2018 the stock fell another 30 % in the following month; when Grayscale’s GBTC lost its ETF monopoly it flipped from a +40 % premium to a –30 % discount and never recovered.
Analysts already price in a post-index liquidity discount: MSTR now trades roughly at par to its BTC stash, a level that removes any accretion from future equity issuance.
4. Saylor’s defence—and the market’s reply
CEO Michael Saylor argues MSTR is an operating business (“a $500 m software company that happens to own Bitcoin”) and points to five listed digital-security offerings as proof of active treasury engineering .
Investors are unmoved: the stock’s beta to BTC has actually risen above 2.5 as traders hedge the potential index exile.
Meanwhile $7 bn of convertibles with strike prices between $143 and $672 begin to look like pure debt if the share price stays sub-$180, raising the spectre of a “double-dip” where both valuation and earnings-per-share metrics deteriorate simultaneously.
5. Red-line anxiety spreads to the DAT pack
MSCI has put 38 crypto-heavy issuers on watch; together they control >1 % of the free-float value of global small-cap indices.
The message is binary: stay under 50 % and keep the passive bid, or cross the line and live in the liquidity wilderness.
For the broader “print-shares-buy-coins” industry, the free lunch appears to be over—five years after Saylor invented it, a footnote in an index methodology file may finish it off .
No comments yet