On Friday, shares of MicroStrategy Incorporated (MSTR) experienced a significant decline, falling approximately 8%. This decline follows an announcement from MSCI, a key index provider, about upcoming changes to its eligibility criteria for companies included in its global stock indexes.

MSCI’s New Eligibility Criteria

In a recent statement, MSCI revealed that it would implement new rules starting November 30, which aim to exclude certain “non-operating companies.” This classification primarily targets companies whose operations resemble those of investment funds rather than traditional businesses. As a result, MicroStrategy, known to be the largest corporate holder of Bitcoin, could potentially fall under this category.

Implications of Potential Exclusion

The prospective exclusion of MicroStrategy from MSCI indexes could compel index-tracking funds to divest their holdings in affected companies. Such action would impact not only MicroStrategy but also other companies that primarily hold digital assets.

MSCI plans to provide a final list of companies impacted by these changes on November 11, ahead of the rules’ effective date.

MicroStrategy’s Position

Executive Chair Michael Saylor has publicly criticized the proposed changes, labeling them as discriminatory towards companies engaged in digital asset management. Currently, MicroStrategy holds roughly 4% of the total Bitcoin supply, underscoring its significant stake in the cryptocurrency market.

Market Response

Despite the immediate market reaction, which saw MSTR shares priced at $136.99, with a decline of 9.45%, some analysts believe that the market can adapt to these developments. Sean Farrell, Head of Digital Asset Strategy at Fundstrat, expressed a more tempered outlook, stating, “I still think the market can absorb the associated flows.”

Farrell estimated that the anticipated selling from MSCI-linked products could amount to around $2 billion but noted that the market has had ample time to prepare for this scenario. He also pointed out that MicroStrategy raised over $2 billion in common stock earlier in August, which could mitigate potential negative impacts.

Bitcoin Market Reaction

In conjunction with the news affecting MicroStrategy, Bitcoin’s price (BTC) also saw a slight decline in the morning trades on Friday, illustrating broader market sentiments influenced by these regulatory changes.