Prediction Markets Bet on Strategy’s MSCI Removal by Year-End, With Odds Near 90%
Summary
- Prediction market Polymarket showed the probability of a “yes” outcome on Strategy’s removal from the MSCI index by year-end rising to 90%.
- MSCI’s new standards excluding non-operating companies from the Global Investable Market Indexes (GIMI) have increased the chances of Strategy’s removal.
- The report said a removal could force funds tracking the MSCI index to sell Strategy shares, while also worsening funding conditions for additional Bitcoin purchases.
Forecast Trend Report by Period
Prediction-market odds that Bitcoin treasury company Strategy will be removed from MSCI indexes by year-end have climbed to nearly 90%. The bets surged after MSCI adopted new standards that exclude non-operating companies.
According to Prediction Position Platform on Oct. 15, the probability of a “yes” outcome on Polymarket for whether Strategy will be excluded from MSCI indexes by Dec. 31 stood at 90%. That was sharply higher than a day earlier.
The growing concern follows a change in MSCI’s index inclusion rules. MSCI said that day it had adopted a new methodology that excludes non-operating companies from the Global Investable Market Indexes, or GIMI. It first examines whether a company holds substantive operating assets. Companies that fail that test are then reviewed on financial ratios. If they miss the threshold on at least four of five metrics, their eligibility for index inclusion is restricted.
Existing constituents would be removed only if they are judged ineligible based on their two most recent annual disclosures. MSCI plans to announce the final list on Nov. 11 and implement the changes after the market closes on Nov. 30.
If the removal goes ahead, funds tracking MSCI indexes may have to sell Strategy shares. That means index-related selling could emerge regardless of the company’s earnings or the price of Bitcoin.
The Bitcoin market could also be affected through Strategy’s funding pipeline. If stock weakness makes it harder for the company to raise equity, that could weigh on additional Bitcoin purchases.
Strategy had previously opposed the new standards while arguing that the direct impact would be limited. The company said funds tracking MSCI GIMI hold about 13 million of its shares, equal to 3.1% of its common shares outstanding. It said that stake is smaller than its average daily trading volume.
