On Wednesday, Strategy Inc, trading on NASDAQ under the ticker MSTR, saw an increase in its share price after MSCI, a leading provider of global equity indexes, decided to retract its earlier proposal to exclude companies holding substantial digital asset treasuries from its benchmarks. This decision marks a significant shift in MSCI's stance on how such entities are treated within key investment indexes.
Earlier in the fall, MSCI had proposed that companies primarily managing digital asset treasuries be removed from its global indexes. The rationale provided was that these digital asset treasury companies operate more like investment funds, which traditionally are excluded from many equity indexes. The proposal had caused unease across the crypto sector and among index-tracking investors, with concerns raised that other major index providers might adopt similar exclusionary practices.
Contrasting MSCI's viewpoint, firms engaged in managing digital asset treasuries pushed back against the plan, emphasizing that they are legitimate operating companies focused on building innovative products in the crypto space, rather than passive investment vehicles. They argued the proposed exclusion was an unjust generalization that unfairly targeted the crypto industry.
The backtrack by MSCI, announced during pre-market hours on Wednesday, reduces previously elevated uncertainty and risk for publicly traded companies holding large digital-asset reserves. Owen Lau, an analyst at Clear Street, noted that although this adjustment does not settle the broader, enduring questions about the inclusion of digital asset treasury companies (or DATCOs) in indexes, it removes a substantial technical risk in the near term for certain public equities acting as proxies for bitcoin and other crypto exposures.
From a technical standpoint, the current stock performance of Strategy presents a mixed but predominantly bearish picture. At present, the stock trades beneath key moving average levels, underscoring a downtrend. It is priced approximately 0.9% below its 20-day simple moving average (SMA), 16.9% under its 50-day SMA, and significantly, 48.5% below its 200-day SMA.
These metrics reflect persistent weakness in Strategy’s price action. The relative strength index (RSI), a momentum indicator, stands at 38.36, which suggests a neutral momentum zone. This level implies that Strategy's stock is neither oversold nor overbought at this juncture, warranting close monitoring for any shifts in momentum as the stock maneuvers within its current trading range.
Meanwhile, the moving average convergence divergence (MACD) indicator is positioned above its signal line, signaling a short-term bullish momentum. However, this is set against the backdrop of an otherwise bearish trend, hinting that any uptick may be a technical relief bounce instead of the initiation of a sustainable upward reversal.
Support for the stock is anchored near the $155.50 level. Should this support be tested and broken, further downward pressure may materialize. The absence of a well-defined resistance point on the upside suggests that without new catalysts, Strategy's shares might find it challenging to reclaim upward momentum.
A notable technical event occurred in October when the 50-day SMA crossed beneath the 200-day SMA, an indicator commonly referred to as a 'death cross.' This formation is widely interpreted as a confirmation of a bearish trend and underlines the necessity for caution among traders considering long positions.
Over the course of the past twelve months, Strategy’s shares have declined by approximately 51.91%. This extended period of price weakness highlights the stock’s challenges in sustaining positive momentum. Presently, the stock sits at only 4.7% above its 52-week low, positioning it close to its recent nadir. This status could represent a critical point for market participants, as further deterioration might trigger increased selling pressures.
At the time of publication on Wednesday, Strategy shares were trading at $162.10, marking a 2.58% increase on the day according to market data from Benzinga Pro. The share price movement reflects a market response to MSCI’s policy reversal and the decreased near-term risk for companies managing significant crypto treasury holdings.