MSTR stock could slip to $150 as Strategy responds to MSCI on DAT exclusion

MSTR stock price retreated by over 1.30% today, Dec. 10, as the company posted its response to MSCI on the proposal to exclude Digital Asset Treasury companies on indices. 

Strategy, formerly known as MicroStrategy, dropped to $185, a few points below this week’s high of $197. 

In a statement, the company explained why MSCI should not exclude it and other similar companies from its indices. It argued that Strategy was an operating company and not an investment fund. Its main difference with other firms is that it has decided to use Bitcoin (BTC) to generate returns to its shareholders.

Strategy also argued that the digital-asset-specific 50% threshold that MSCI has proposed was arbitrary, discriminatory, and unworkable. It pointed to companies in other industries that have concentrated holdings in a single asset type. For example, some companies have accumulated large assets like land and gold that will be spared by MSCI’s rules. 

Additionally, Strategy argued that the proposal will inject policy considerations into indexing and stifle innovation in the United States and other countries. 

The statement came after MSCI said that it was reviewing whether to exclude DAT companies from its indices. It argues that these companies resemble investment funds rather than operating firms. JPMorgan, the biggest US bank, has supported the move. 

A move to remove Strategy from MSCI’s indices would have a major impact on the stock. For one, it would force most funds that hold the stock to sell it, leading to more pressure at a time when it is stuck in a bear market. 

Some of the top funds that hold the MSCI stock are the Vanguard Total Stock Market ETF, Invesco QQQ Trust Series 1, Vanguard Growth ETF, and Vanguard Information Technology ETF.

MSTR stock price chart analysis 

The daily chart shows that the MSTR stock price has been in a strong freefall in the past few months. It has formed a few bearish patterns, pointing to a continuation of this decline.

Strategy has formed a bearish flag pattern, which is made up of a vertical line and an ascending channel. It also formed an inverse cup-and-handle pattern, and remains below the 50-day and 100-day Exponential Moving Averages. 

Therefore, there is a risk that the Strategy stock price will have a bearish breakout, with the next target being at $150, down by 20% from the current level.