- Strategy could face billions in forced outflows if MSCI and other index providers remove it from major equity indices.
- The firm’s valuation premium has collapsed, its market cap barely exceeds Bitcoin holdings, and its mNAV ratio is near pandemic lows.
- Crypto downturn and potential index exclusion threaten liquidity, institutional credibility, and the effectiveness of Strategy’s funding model.
JPMorgan has warned that Strategy could face significant outflows if MSCI follows through on a proposal that may see the company removed from key benchmarks such as MSCI USA and the Nasdaq 100, which could prompt US$2.8 billion (AU$4.31 billion) in MSCI-linked selling alone. The analysts said Strategy’s share decline has deepened as investors anticipate a possible exclusion, with its valuation premium eroding sharply over recent months.
Around US$9 billion (AU$13.86 billion) of Strategy’s approximate US$50 billion (AU$77 billion) market value is held in passive index vehicles, leaving the stock highly sensitive to benchmark decisions.
JPMorgan added that outflows could extend to US$8.8 billion (AU$13.55 billion) if other index providers adopt similar rules. These concerns follow a broader slide in crypto markets and reflect how heavily Strategy’s performance now hinges on sentiment towards Bitcoin.
Strategy’s earlier growth depended on issuing equity to fund continuous Bitcoin purchases, a cycle that historically pushed its valuation beyond the value of its holdings. That premium has now largely disappeared, with its market capitalisation sitting barely above its Bitcoin reserves, signalling a deterioration in confidence.
JPMorgan has also noted that Strategy’s mNAV has dropped to its weakest point since the pandemic period, approaching levels where the firm is valued almost entirely for its crypto treasury.
Related: Crypto Treasury Firms Add Pressure to Bitcoin’s Slide, Says Columbia Professor
Market and Capital Stress
MSCI is consulting on whether companies whose digital asset holdings exceed 50% of their total assets should be excluded from its indices, with feedback due by 31 December and a final call planned for 15 January 2026. Earlier comments to MSCI suggested some market participants view digital-asset treasury companies as similar to investment funds, which are already ineligible.
The ongoing fall in Bitcoin has added pressure to Strategy’s funding structures, as its preferred shares have dropped and the yield on its 10.5% notes has risen to 11.5%, while a recent euro-denominated preferred issue slid below its discounted offer price.
Analysts said exclusion from major indices would be interpreted negatively by market participants and could further restrict liquidity and access to capital for the company.
Related: Saylor’s Strategy Buys Over $800M in Bitcoin as TD Cowen Reaffirms Massive Upside
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