The industry continues to reevaluate the crypto treasury model, and the MSCI’s decision looms.
Analysts have highlighted significant dilution concerns for Michael Saylor’s Strategy, stemming from its aggressive funding strategies to acquire more cryptocurrency.
While its playbook has created many copycats, Strategy has been under a lot of scrutiny over its long-term positioning and financial health.
According to recent CryptoQuant reports, analysts believe Strategy selling $700M in stock last week has triggered dilution and continued downside pressure. The stock is currently down 70% from its all-time high (ATH) and is reportedly still bleeding as supply hits the market.
The shares are down about 55% over the past 12 months and 36% year-to-date, compared with a 3.6% drop in Bitcoin this year. Strategy’s market value has also fallen to around $45 billion while its BTC holdings are worth around $60 billion.
“Balance sheet leverage comes at a cost,” one analyst wrote.
Aside from the sell pressure on its stock, another factor affecting Strategy’s stock is the company’s use of at-the-market (ATM) equity offerings and convertible debt to finance its Bitcoin purchases.
The model has seen the company rake in over $900 million from ATM sales to buy additional Bitcoins.
Basic shares outstanding are up approximately 20% year-to-date as of December 2025, and analysts continue to warn that tighter capital markets could exacerbate dilution if the company continues issuing shares or debt.
The recent $1 billion Bitcoin buy, funded partially via equity and debt, has also contributed to the stock’s underperformance, as there were brief periods when the company’s market value fell below the value of the company’s Bitcoin holdings, which highlights investor fears over leverage and future share issuances.
Strategy started out as a software company, MicroStrategy, but pivoted to Bitcoin investing in 2020. It was included last December under the Nasdaq’s technology sub-category, a decision questioned by some market-watchers who argued that the pioneering business model aligns more closely with an investment fund.
Earlier this month, there was speculation about Nasdaq removing Strategy from the Nasdaq100, with analysts like Mike O’Rourke, chief market strategist at JonesTrading, arguing that Strategy was included on a technicality and that this was a “perfect opportunity for Nasdaq to correct last year’s mistake.”
The removal could have led to passive fund outflows of about $1.6 billion, according to estimates by Kaasha Saini, head of index strategy at Jefferies; however, the company was not removed.
Global index provider MSCI has also flagged worries about the presence of digital asset treasury companies in its benchmarks. It is due to decide in January on whether to exclude Strategy and similar companies, but Saylor is bullish in his hopes of a favorable outcome.
Earlier this month, he said Strategy was engaging with MSCI, but that if it was excluded, it wouldn’t matter. Some believe his confidence stems from the market value, which is still relatively high, but that could change, given recent volatility.
Despite Saylor’s confidence, if MSCI does exclude Strategy, it will be an uphill climb, cauterizing the outflows from spooked investors. The decision will also trigger a ripple effect globally that will affect over 200 DATs, discouraging new entrants and pressuring existing ones to pivot, spin off holdings, or limit allocations to avoid penalties.
