California Public Employees’ Retirement System (CalPERS) has been caught on the wrong side of the recent sell-off in Strategy, with its first bet on the Bitcoin proxy stock sliding from more than $144m to about $80m in a matter of months.
According to a recent SEC filing, CalPERS acquired 448,157 Strategy (MSTR) shares in the third quarter, paying over $144m for the position. The stake, which gave the fund direct equity exposure to one of the most volatile Bitcoin plays in traditional markets, is now worth roughly $80m.
In the context of CalPERS, the hit is manageable. The fund manages over $550b in assets for more than 2m public sector workers and retirees, making it the largest public pension plan in the US, so the Strategy stake represents only a tiny slice of its portfolio.
Index Risk Looms With JPMorgan Flagging Possible MSCI And Nasdaq Exits
Strategy’s stock has done the damage. The shares closed around $175 on Wednesday and are down about 45% so far this quarter.
The drop largely tracks Bitcoin’s own swings, as well as a broader risk-off tone that has weighed on high-beta tech and crypto-related names.
Sentiment has also taken a hit from Wall Street. JPMorgan analysts recently warned that Strategy could be removed from major equity benchmarks such as the MSCI USA index and the Nasdaq 100. They estimated that MSCI exclusion alone might trigger up to $2.8b in outflows, with more selling pressure if other index providers follow.
The index angle matters because passive money is already deeply tied to the name. Funds that track benchmarks and hold Strategy as part of those indices account for nearly $9b of market exposure, and a decision on its index status is expected by Jan. 15.
A removal would likely force some of those vehicles to sell, regardless of their view on Bitcoin or the company.
Strategy’s Premium Vanishes As Investors Turn Wary Of Leveraged Bitcoin Plays
For a business that built its brand on wrapping Bitcoin inside an equity ticker, index risk hits more than daily volumes. Strategy became a favoured tool for institutions that wanted listed market access to Bitcoin but were not ready to hold the token directly, so any loss of benchmark status threatens that role as a bridge between traditional finance and crypto.
The company’s rise followed a simple pattern. It sold stock into the market, used the proceeds to buy more Bitcoin, then leaned on each crypto rally to justify fresh issuance and even larger purchases.
At the height of that cycle, Strategy’s market value traded far above the worth of its Bitcoin holdings, reflecting a rich premium for its aggressive strategy.
That premium has largely evaporated. The firm’s valuation now sits only slightly above the value of its Bitcoin reserves, a sign that investors are no longer willing to pay as much extra for its leveraged play on the asset.
For CalPERS and other large funds using listed proxies to tap crypto, the episode is a reminder that Bitcoin exposure packaged in equity form can still deliver sharp drawdowns when sentiment turns.
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