The Daily Wolf | The Real Reason Bitcoin Dropped to $67,000 Overnight

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Scott Melker (0:30)

Michael Saylor's strategy has officially been removed from the MSCI index. Is that the reason for the major Bitcoin sell-off? I don't think so. We're going to talk about it today on The Daily Wolf. Let's go.

What is up, everybody? Welcome to The Daily Wolf on Yahoo Finance. I am your host, Scott Melker, also known as The Wolf Of All Streets. It's good to be back. Of course, yesterday, we did not have this show because I was live in the Yahoo Finance studios in New York for Yahoo Invest. What an incredible day that was. They had the biggest names in finance live all day. I got the first opportunity actually to sit in that studio in New York City and record. What a blessing. Very, very cool experience. What is not a very, very cool experience is what's been happening to Bitcoin. Not that great. It's trading like its CEO had an extramarital affair.

Jensen Huang obviously has rocked the entire global market with his improprieties being removed as the CEO of NVIDIA and seemingly having a new affair added every single day. And in a risk off environment, Bitcoin obviously has taken it on the chin more than other assets. Last night, obviously it sold down as far as $67,000. Not the best price action that you would want to see. And what we assumed was a renewed bull market. And part of the bad news, bad news, I'm going to air quote it right there. Part of the bad news here is what happened to strategy. Strategy the world's biggest corporate Bitcoin holder to be dropped from MSCI indexes. Strategy to describe the proposal as discriminatory, arbitrary, and misguided and encourage shareholders to oppose it. So we thought that this might be coming as we reported in the past on MSCI likely changing rules on what qualified a company to be a part of their index. They had been adding pretty aggressive language about the operating business having to have actual income, and it couldn't basically just be a treasury company that was holding an asset as a business. So we knew this was likely coming. Strategy was removed, MetaPlanet was removed, UPEXI, Solana Treasury Company, who I happen to share space with here in the offices in Tampa. They were also unfortunately removed, but this was not only Bitcoin, not only Solana, also Yellowcake, which is a uranium holding company. They were also removed as well as some agriculture companies in Europe and others. No Bitcoin was actually mentioned specifically in the language. Sharp Link actually is also on the list, but interesting was not deleted. So obviously, as I said, Sailor says that this is discriminatory, arbitrary, arbitrary and misguided. Now, interestingly, you can look at a company like Berkshire Hathaway or in Buffett's company, which effectively just buys and hold stocks for living. Of course, they do actively trade, but they're not an operating business per se, and they're not being targeted by index funds. So it does seem like it's certain assets here that are being picked on. So let's talk about the numbers here. Obviously, strategy was down on the news when it happened about 7% that day.

JP Morgan said that this would be about $2.8 billion in forced outflows as a result of this, which is less than the daily volume of MSTR. So this shouldn't actually be that big of a deal. But when you're delisted from an index, that index obviously has to sell all the shares they've been holding to keep you indexed, which puts selling pressure on the stock. So they're still listed on NASDAQ. I've seen some crazy reports about what this could possibly mean. The question is whether other indexes are going to see this as a signal and decide to do the same thing to our beloved treasury companies. But there's no evidence beyond the news say it could happen, that that has any chance of actually happening. So listen, a little bit of selling pressure here on MSTR. But to be very clear, that does not mean that they have to sell any Bitcoin, another thing that I've seen reported. This has nothing to do with the Bitcoin holders of MSTR. It really has nothing to do with the shareholders of MSTR for them selling their Bitcoin. And it definitely has nothing to do with Bitcoin in general. So don't buy those stories if you do see them. Now this isn't necessarily a crypto specific story, but we know that down the road it will become one.