MicroStrategy, now known as Strategy, the company long viewed as a “bitcoin-on-Nasdaq” proxy, faces its most significant structural threat since Michael Saylor began converting it into a leveraged Bitcoin holding vehicle five years ago. A new research note from JPMorgan warns that the company is “at risk of exclusion from major equity indices” as MSCI approaches a crucial decision on whether companies with large digital-asset treasuries should remain in stock benchmarks.
MSCI is considering implementing a rule that would remove companies whose digital-asset holdings exceed 50% of their total assets, a category in which Strategy sits at the extreme. The consultation period will remain open until December 31, with a final decision expected on January 15, 2026.
Billions in passive outflows at stake
According to JPMorgan analysts led by Nikolaos Panigirtzoglou, Strategy’s market capitalization stands around $59 billion, with nearly $9 billion held in passive index-tracking vehicles such as ETFs and mutual funds linked to major benchmarks like the Nasdaq 100, MSCI USA, and MSCI World.
If MSCI moves forward with the exclusion, JPMorgan estimates that “outflows could amount to $2.8 billion… and $8.8 billion from all other equity indices if other index providers choose to follow MSCI.” Such an event would likely trigger a significant wave of mechanical selling pressure, given the high concentration of passive ownership in the stock.
While active managers are not required to follow index adjustments, JPMorgan cautioned that exclusion from major benchmarks would have broader consequences.
“Exclusion from major indices would certainly be viewed negatively by market participants, raising concerns about the cost and the ability of Strategy to raise equity and debt in the future,” the bank’s analysts said.
The collapse of the “Bitcoin-on-Nasdaq” premium
The warning arrives amid a period of steep underperformance for Strategy’s shares, which have fallen more than Bitcoin itself in recent months. The stock is down about 40% over the past month and roughly 68% below its record high. Over the past six months alone, shares have lost more than half their value.
Strategy’s market-implied net asset value (mNAV) ratio, reflecting its enterprise value relative to its per-share Bitcoin holdings, has collapsed towards 1.0, meaning the stock now trades almost exactly at the value of its underlying Bitcoin. The prized premium that once allowed the company to issue new equity at elevated valuations, buy more Bitcoin, and benefit from reflexive gains has effectively evaporated.
JPMorgan’s note said the decline is “far more to do with looming index-inclusion risk than with crypto-market dynamics.” The bank believes that fears of MSCI exclusion now dominate trading behavior in Strategy’s stock, tethering its prospects closely to its Bitcoin balance sheet.
A fragile Bitcoin-first model
Strategy’s transformation began in 2020, when Saylor started converting corporate cash reserves into Bitcoin and issuing both debt and equity to purchase more. The model relied on a self-reinforcing flywheel: rising Bitcoin prices boosted Strategy’s market capitalization, which enabled more fundraising and further accumulation of Bitcoin.
Yet, as Bitcoin has dropped nearly 35% from its October high, sliding below $82,000 this week, that cycle has weakened considerably. The company holds 649,870 Bitcoin at an average price of $74,433. At current prices, a further 15% decline would push Strategy’s entire Bitcoin position into negative territory.
Market and reputational risks
Beyond mechanical selling pressure, JPMorgan warns that removal from key benchmarks could impose longer-term reputational and liquidity challenges. A loss of index inclusion could narrow the investor base, reduce trading volumes, and increase funding spreads, the analysts said.
For years, inclusion in indices like the Nasdaq 100 and MSCI World gave passive investors indirect Bitcoin exposure, fueling Strategy’s liquidity and visibility in institutional portfolios. Exclusion would mark a sharp reversal of that trend, transforming what was once a vehicle for mainstream Bitcoin exposure into a more volatile, less liquid asset tied almost entirely to crypto markets.
January 15 as a pivotal moment
If MSCI rules against Strategy in January, JPMorgan expects the company’s valuation to become almost entirely dependent on Bitcoin’s price. The loss of index-linked flows could further erode its premium over net Bitcoin value, effectively ending the multi-year experiment that turned a former software company into a de facto Bitcoin exchange-traded vehicle.
As Strategy faces this critical decision, its future may hinge not just on Bitcoin’s trajectory but on whether traditional financial indices decide that companies with digital-asset-heavy balance sheets still belong in mainstream equity markets.
Kristian Koch
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