Strategy  formerly MicroStrategy and now widely known as the largest publicly traded holder of bitcoin — may be at risk of being dropped from the Nasdaq 100 during Friday’s annual reshuffle, according to multiple analysts. The potential exclusion stems from mounting concerns over whether the company still qualifies as a technology firm or more closely resembles a crypto investment vehicle.

Strategy’s inclusion last December raised eyebrows, as the company had already pivoted sharply away from its legacy software operations and toward large-scale bitcoin accumulation. While this strategy fueled a rally that lifted its market cap to $128 billion earlier this year, it has also made the stock extremely sensitive to bitcoin volatility.

Why Strategy Is at Risk

Despite reporting a $2.78 billion profit last quarter—mainly due to an accounting change that allowed unrealized bitcoin gains to be recognized—core software revenue remained modest at $128.7 million. Analysts say this mismatch highlights the company’s shift away from traditional tech operations.

Interactive Brokers’ Steve Sosnick noted that if Strategy is categorized as a holding company or crypto company instead of a software firm, it could be excluded from the Nasdaq 100, which tracks the largest non-financial companies.

Index reshuffles matter: deletion can trigger large passive fund outflows. Jefferies estimates Strategy could see $1.6 billion in selling pressure if removed.

Valuation vs. Model

Strategy’s market cap is still $52.7 billion, larger than about 30 current Nasdaq 100 constituents. But its bitcoin holdings alone are worth more than $61 billion, raising questions about whether the stock merely reflects crypto exposure rather than operational fundamentals.

MSCI is also reviewing whether to exclude “digital asset treasury companies” from its benchmarks, with a decision expected in January.

Diverging Analyst Opinions

• Critics say Strategy was added only due to a technicality and that the rebalance offers Nasdaq a chance to correct that.
• Supporters argue that its size should secure its place in the index.
• CEO Michael Saylor has generally dismissed concerns about index exclusion, saying it will not affect the business.

Jefferies also expects several non-crypto companies — including Biogen and CDW — may be dropped due to smaller market caps.

The official reshuffle announcement will come after the market close on Friday, with changes taking effect on December 22.