Bitcoin Updates Today: MSCI's Index Decision May Change MicroStrategy's Classification, Potentially Weakening Bitcoin's Integration into Mainstream Finance

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Bitget-RWA2025/11/21 01:40

By:Bitget-RWA

- JPMorgan warns MSCI excluding MicroStrategy from indices could trigger $11.6B in outflows, threatening its Bitcoin-linked valuation. - Strategy's stock now trades at 0.90x Bitcoin holdings (vs. 2.7x last year), reflecting index exclusion concerns over its 56% BTC portfolio. - MSCI evaluates if firms with >50% digital assets should stay in benchmarks, with decision due Jan 15 that could reclassify Strategy as an investment fund. - Active managers face reputational risks if Strategy is delisted, while its

JPMorgan Chase has cautioned that if

MSCI

decides to remove MicroStrategy (MSTR)—a company with significant exposure to

Bitcoin

—from major stock indices, it could lead to billions of dollars in passive investment outflows, putting the company’s value and liquidity at risk. The bank pointed to the index provider’s upcoming January 15 decision on whether firms focused on digital assets should continue to be included in traditional benchmarks as a critical juncture for

Strategy

, which currently holds more than $56 billion in Bitcoin. Should MSCI act independently, the company might see $2.8 billion in outflows, and if other index providers follow, total losses could reach $11.6 billion,

analysts led by Nikolaos Panigirtzoglou estimate

This alert comes as Strategy’s shares have lagged behind Bitcoin’s performance in recent months, with its market capitalization now trading at only a 0.90 premium over its Bitcoin assets—a steep drop from a 2.7 multiple a year prior,

based on market data

JPMorgan

attributes this mainly to rising fears of index exclusion, rather than a decline in Bitcoin’s value. The company’s presence in indices such as the Nasdaq 100 and MSCI USA has indirectly brought Bitcoin exposure into both institutional and retail portfolios,

a trend that could reverse if it is dropped

MSCI is currently assessing whether companies whose digital asset holdings exceed half of their total assets should continue to be part of equity benchmarks. Strategy, which functions primarily as a Bitcoin treasury and lacks a traditional revenue model, is a prime example of this category. The consultation period for this review ends December 31,

with a verdict expected by January 15

. Experts suggest that exclusion would mean Strategy is reclassified as an investment fund—a group not eligible for index inclusion—thereby undermining its present structure,

according to market analysis

Bitcoin Updates Today: MSCI's Index Decision May Change MicroStrategy's Classification, Potentially Weakening Bitcoin's Integration into Mainstream Finance image 0

The risks are not limited to passive investment vehicles. Active fund managers, though not required to mirror index changes, could still suffer reputational harm, increased borrowing costs, and diminished liquidity if Strategy is removed from indices. JPMorgan highlighted that the company’s stock price has recently fallen by more than 60% from its November 2024 peak—

underscoring these structural weaknesses

. Furthermore, its perpetual preferred shares have declined sharply, with yields on 10.5% notes

rising to 11.5%

Michael Saylor, the executive chairman of Strategy, has stood by the company’s Bitcoin-centric approach, envisioning a $1 trillion Bitcoin balance sheet to transform global finance. Yet, the current market climate—

with Bitcoin’s price down 30%

since October highs and $1 trillion wiped from the crypto market—has brought increased scrutiny to this strategy.

The outcome of the January 15 decision could prove pivotal. Should MSCI opt for exclusion, Strategy’s valuation may become entirely dependent on Bitcoin’s price, eliminating the premium that has previously driven its growth. This would challenge Saylor’s vision of using Bitcoin to launch new financial products,

such as Bitcoin-backed lending and insurance

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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