JPMorgan Warns Strategy Faces Billions in Outflows if MSCI Excludes It From Indices

Quick Take:

• JPMorgan analysts flag major index exclusion risk for Strategy as MSCI nears a decision on companies with heavy digital asset holdings.
• MSCI removal alone could trigger $2.8 billion in forced outflows; total could reach $8.8 billion if Nasdaq-100 and others follow suit.
• Approximately $9 billion of Strategy’s market cap is held by passive funds tracking key benchmarks.
• Decision expected by January 15, 2026, following consultation on treating Bitcoin treasury firms as investment vehicles rather than operating companies.
• Strategy unlikely to sell Bitcoin even under pressure, given its long-term holding strategy.

Strategy risks significant passive outflows if global index provider MSCI proceeds with excluding digital asset treasury companies from its benchmarks, JPMorgan analysts warned in a Nov. 20 note.

The firm, formerly known as MicroStrategy, currently sits in major indices including the Nasdaq-100, MSCI USA, and MSCI World. These inclusions have allowed indirect Bitcoin exposure to flow into traditional portfolios via passive vehicles.

JPMorgan estimates that roughly $9 billion—or about 15-18%—of Strategy’s $50-59 billion market capitalization is owned by index-tracking ETFs and mutual funds. An MSCI exclusion would force mechanical selling of holdings tied to its indices, estimated at $2.8 billion.

If other providers like those behind the Nasdaq-100 follow MSCI’s lead, total passive outflows could swell to $8.8 billion, the analysts said (The Block).

MSCI launched a consultation in October on whether firms with digital assets exceeding 50% of total assets—Strategy’s Bitcoin holdings represent nearly all its enterprise value—should remain eligible for equity indices. Market participants increasingly view such companies as resembling investment funds, which are ineligible for inclusion (CoinDesk).

The consultation closes Dec. 31, with a final decision due by Jan. 15, 2026. Any changes would take effect in February rebalancing.

Index removal would pressure valuation and liquidity, JPMorgan noted, even if active managers aren’t required to sell. It could raise doubts about Strategy’s future capital-raising ability through equity or debt—core to its Bitcoin acquisition model (Decrypt).

Recent underperformance of MSTR shares relative to Bitcoin itself largely reflects these exclusion fears rather than crypto market dynamics alone, the bank added.

Strategy has consistently signaled it has no intention of selling Bitcoin, regardless of stock price pressure. The company continues aggressive purchases, adding thousands of BTC weekly in recent months funded by at-the-market equity and preferred stock offerings.

While the risk is material, an MSCI decision to maintain the status quo—or a delay—could ease near-term selling pressure on the stock.

Disclaimer: This article is for informational purposes only and does not constitute advice of any kind. Readers should conduct their own research before making any decisions.