MSCI delays removing MSTR, but analysts say the crisis is far from over

Strategy (MSTR) stock rose nearly 6% in after-hours trading on January 7, following MSCI’s announcement that it will temporarily not proceed with removing digital asset reserve companies (DATCOs) from its indices. While this seems like good news, industry analysts are more cautious—they generally believe this is only a delay, and the true crisis is far from over.

The Real Meaning Behind MSCI’s Decision

According to the latest news, MSCI’s decision carries two key messages. First, in the February 2026 index review, MSCI indeed will not implement the proposal to remove DATCOs, which is a “reprieve” for Strategy. But more importantly, MSCI announced it will initiate a broader consultation to study how to handle non-operational companies.

What does this mean? MSCI has not completely changed its stance but has postponed the decision. The company plans to further research how to distinguish investment companies from others and whether additional inclusion criteria are needed. In other words, Strategy has gained a “breathing room,” not a final victory.

Analysts’ Cautiously Optimistic View

Reactions to this decision among analysts are somewhat divided.

TD Cowen analyst Lance Vitanza said this development “surprised us,” but he candidly pointed out: it’s still uncertain whether this represents a victory for the defensive side or merely a delay in execution. He has a “Buy” rating on MSTR with a target price of $500.

Benchmark analyst Mark Palmer views the news more positively, believing MSCI’s decision provides Strategy with a “welcome breathing space,” and that Strategy’s opposition to removal seems to have had the expected effect. However, Palmer also emphasizes that MSCI’s consideration of removing non-operational companies from the index means “this storm is not over.” He has a “Buy” rating with a more aggressive target of $705.

Both analysts are bullish on MSTR but emphasize a common point: this is not the end, just a chapter in the process.

Deeper Challenges Facing Strategy

But there’s a more noteworthy detail: the cautiousness of analysts may not only stem from MSCI’s decision still being uncertain but also because Strategy itself faces more severe challenges.

According to the latest information, Strategy’s financing environment has changed significantly. Unlike the low-cost convertible bonds of 2024-2025, the company now relies on high-cost preferred shares and dilutive common stock issuances, with actual cash costs reaching 10-12.5%. This directly impacts the economics of its Bitcoin acquisitions: in early January, Strategy bought 1,283 BTC at an average price of $90,391 per coin, totaling $116 million. But with rising financing costs, such accumulation strategies become more expensive.

Worse, Strategy’s mNAV premium has plummeted to 1.03x. What does this mean? The valuation buffer that once supported its outperformance of Bitcoin has almost disappeared. In Q4, the company reported unrealized losses of up to $17.44 billion. This weakens Strategy’s ability to fund future Bitcoin purchases without diluting shareholders.

In other words, even if MSCI ultimately does not remove Strategy, the company faces a more fundamental problem: what to use as funding to continue buying Bitcoin?

Future Uncertainties

MSCI’s broader consultation is expected to take some time, giving Strategy a window to improve its financial situation. But the key question is: how wide is this window?

From the timeline, MSCI expects the next review in February 2026, meaning the real test may come later this year. Before then, Strategy needs to demonstrate the sustainability of its business model, not just rely on the delay in index decisions.

Summary

MSCI’s postponement is indeed a positive signal, but as analysts say, the storm is far from over. The real issue is not whether the index will eventually remove Strategy, but whether Strategy can maintain its Bitcoin accumulation strategy amid rising financing costs and shrinking premiums. The 6% stock price increase reflects market optimism about the delay, but it may just be a false alarm. The key focus going forward should be: how will Strategy address its financing difficulties, and whether MSCI will change its stance after further consultation.