CalPERS, the Largest Pension Fund in the US, Experiences Significant Losses as Investment Strategy Declines to $80 Million

The California Public Employees’ Retirement System (CalPERS) has found itself adversely affected by the recent downturn in Strategy, with its initial investment in the Bitcoin proxy stock decreasing from over $144 million to approximately $80 million within a few months.

As per a recent SEC filing, CalPERS purchased 448,157 shares of Strategy (MSTR) during the third quarter, investing more than $144 million for this stake. This investment provided the fund with direct equity exposure to one of the most unpredictable Bitcoin-related assets in traditional markets, which is now valued at around $80 million.

In the context of CalPERS, this loss is manageable. The fund oversees more than $550 billion in assets for over 2 million public sector employees and retirees, making it the largest public pension fund in the United States, so the Strategy investment constitutes only a small fraction of its overall portfolio.

Index Risk Emerges As JPMorgan Signals Potential MSCI And Nasdaq Exits

Strategy’s stock has incurred the losses. The shares closed at approximately $175 on Wednesday and have declined by about 45% so far this quarter.

This decline closely follows Bitcoin’s fluctuations, along with a broader risk-averse sentiment that has impacted high-beta technology and crypto-related stocks.

Market sentiment has also been affected by Wall Street. Analysts at JPMorgan recently cautioned that Strategy might be removed from significant equity indices such as the MSCI USA index and the Nasdaq 100. They projected that exclusion from MSCI alone could lead to outflows of up to $2.8 billion, with additional selling pressure if other index providers take similar actions.

Strategy’s position @MicroStrategy in major indices is now in jeopardy, with JPMorgan warning that removal from MSCI USA or the Nasdaq 100 could trigger billions in outflows.#Strategy #CryptoStocks https://t.co/ozDjakVUm7

— Cryptonews.com (@cryptonews) November 21, 2025

The index aspect is significant because passive investments are already heavily linked to the stock. Funds that track indices and include Strategy as part of those benchmarks represent nearly $9 billion in market exposure, and a decision regarding its index status is anticipated by January 15.

A removal would likely compel some of these funds to divest, irrespective of their stance on Bitcoin or the company.

Strategy’s Premium Disappears As Investors Become Cautious Of Leveraged Bitcoin Investments

For a company that established its reputation by integrating Bitcoin within an equity ticker, index risk impacts more than just daily trading volumes. Strategy became a preferred option for institutions seeking listed market access to Bitcoin without directly holding the cryptocurrency, so any loss of benchmark status jeopardizes its role as a conduit between traditional finance and crypto.

The company’s growth followed a straightforward trajectory. It issued stock into the market, utilized the proceeds to acquire more Bitcoin, and relied on each crypto surge to validate new issuances and even larger acquisitions.

At the peak of that cycle, Strategy’s market capitalization traded significantly above the value of its Bitcoin holdings, indicating a substantial premium for its aggressive approach.

This premium has largely diminished. The firm’s valuation now rests just above the value of its Bitcoin reserves, signaling that investors are no longer inclined to pay a premium for its leveraged position on the asset.

For CalPERS and other large funds utilizing listed proxies to access crypto, this situation serves as a reminder that Bitcoin exposure packaged in equity form can still result in significant losses when market sentiment shifts.

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