MicroStrategy (now Strategy ) , the world's largest corporate holder of Bitcoin, is facing its most consequential structural risk since Michael Saylor began transforming the software firm into a leveraged Bitcoin vehicle five years ago.
The warning comes from a new JPMorgan note that says the company may be removed from major equity indices — including the MSCI USA Index.
The MSCI USA Index is a major stock market benchmark created by MSCI (Morgan Stanley Capital International). It tracks the performance of large-cap and mid-cap U.S. companies, representing about 85% of the U.S. stock market.
MicroStrategy ($MSTR) is now down 40% over the past month and 68% below its record high.
The company holds 649,870 Bitcoin at an average purchase price of $74,433. At current levels, a further 15% drop in Bitcoin would push MicroStrategy's entire Bitcoin position into negative territory.
Related: MicroStrategy accounts for 16% of all 2024 equity raised — mostly to buy Bitcoin
How Strategy's Bitcoin-first model created a structural pressure point
Strategy's corporate transition began in 2020, when Saylor started converting cash reserves into Bitcoin and issuing debt to accumulate more. The model created a unique "Bitcoin-on-Nasdaq" proxy:
• Strategy borrows or issues stock
• Buys more BTC
• BTC appreciation lifts market cap
• Allows new issuance at higher valuations
• Flywheel repeats
For years, the strategy worked. But as Bitcoin slid from its $126,000 all-time high to below $89,000 this week, that flywheel has weakened.
The company's market-implied net asset value (mNAV) — the ratio of enterprise value to Bitcoin per-share value — has collapsed toward 1x, meaning Strategy's stock is now trading almost exactly at the value of its BTC holdings, with little to no premium.
As JPMorgan notes, premium compression eliminates the firm's ability to issue high-priced equity to buy more BTC without diluting shareholders.
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JPMorgan sends harsh warning
A newly circulated JPMorgan research note warns that the company's plunge isn't just about Bitcoin weakness — index rules may now threaten Strategy's place in mainstream equity benchmarks.
The analysts wrote:
"MicroStrategy [is] at risk of exclusion from major equity indices as the January 15th MSCI decision approaches."
MSCI is weighing whether companies whose digital-asset holdings exceed 50% of total assets should remain eligible for traditional stock indexes.
If the rule is implemented, Strategy — whose balance sheet is dominated by Bitcoin — sits at the most extreme end of the criteria.
JPMorgan added:
"With MSCI now considering removing MicroStrategy and other digital asset treasury companies from its equity indices… outflows could amount to $2.8 billion if MicroStrategy gets excluded from MSCI indices and $8.8 billion from all other equity indices if other providers choose to follow."
Nearly $9 billion of Strategy's float is held by passive index funds — meaning any removal would trigger forced mechanical selling. JPMorgan's chart, included in the note, shows Strategy's decline sharply diverging from Bitcoin in recent weeks, which the analysts say "likely reflects a significant extent of concerns about MicroStrategy's index inclusion."
Bitcoin in "extreme fear," analysts warn deeper downside
The warning comes as the crypto market remains under heavy stress.
Bitcoin is trading around $85,000, hitting its lowest levels since April 2025. The plunge began after the U.S. "missed" its October jobs report and risk assets sold off globally.
Bloomberg's Mike McGlone said this week that Bitcoin is now following a 2018-style breakdown and could fall as low as $10,000, calling its chart structure "eerily similar" to the last major unwind. BTC has now dropped more than $40,000 from its peak in just weeks.
Bernstein targets 238% upside for MicroStrategy
Despite the turmoil, not all analysts are bearish.
A new note from top Bernstein analyst Gautam Chhugani reiterated a Buy rating on Strategy with a $600 price target, implying 238% upside from current levels.
Chhugani argues that fears of forced Bitcoin selling are overstated, writing that Strategy still has ample liquidity and long-term debt flexibility. The firm recently made its largest BTC purchase in four months, buying $835.6 million worth of Bitcoin.
He also notes that long-term institutional demand for Bitcoin remains strong, even after the crash, and believes the stock is at an attractive entry point if BTC stabilizes.
A January decision that could reshape Strategy
MSCI's January ruling will effectively determine whether Strategy can remain a mainstream equity proxy for Bitcoin — or whether it will be pushed to the margins of public markets due to its unprecedented digital-asset exposure.
If index providers move ahead with exclusions, Strategy could face the largest structural outflows in its history. If not, the firm may continue its role as Wall Street's highest-beta Bitcoin instrument.
Either way, the next 60 days will define the future of the original Bitcoin-on-Nasdaq company.
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S&P 500 race tightens as Sandisk emerges and Strategy loses momentum
Strategy's second bid for S&P 500 inclusion has also grown uncertain, despite meeting every quantitative requirement on market cap, liquidity and profitability.
The index committee already passed over the company in September — choosing Robinhood and AppLovin instead.
Now, with Sandisk ballooning into a $40 billion "elephant" inside the S&P SmallCap 600, analysts warn Strategy may again lose the next open S&P 500 seat to the AI-driven flash-storage spinout.
Related: Bitcoin, XRP crash as markets react to missing Jobs report
This story was originally reported by TheStreet on Nov 21, 2025, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.
