JPMorgan Flags “Severe” Index Risk for MicroStrategy as BTC Exposure Raises Risk
- JPMorgan warns that MicroStrategy risks removal from the MSCI USA Index due to its exposure to Bitcoin.
- The removal could lead to reputation damage as it signals to active managers that MicroStrategy is a crypto treasury vehicle, not a software firm.
Investment banking giant JPMorgan recently highlighted a structural vulnerability for Strategy Inc., formerly MicroStrategy (MSTR). The bank warns that the company’s heavy reliance on Bitcoin (BTC) holdings could lead to its exclusion from major equity indexes.
JPMorgan Spotlight BTC Exposure Risk for MicroStrategy
JPMorgan disclosed in a recent note that Strategy may be removed from major equity indices, including the MSCI USA Index.
Thus, removal of Strategy from the MSCI USA Index would force passive investment funds to sell their MSTR holdings. This could trigger billions of dollars in immediate outflows from MSCI-linked funds and other providers, such as Russell or Nasdaq.
Top MSCI Index Could Bout MicroStrategy | Source: Matthew Sigel
The root of the JPMorgan note is ongoing consultation from MSCI about revising index rules. The MSCI USA Index, created by Morgan Stanley Capital International (MSCI), is a major stock market benchmark. The index tracks the performance of large and mid-cap U.S. companies, representing about 85% of the U.S. stock market.
MSCI is currently considering excluding companies where digital-asset holdings exceed 50% of total assets. Strategy clearly qualifies, as its BTC holdings dominate its $2.5 billion market cap.
This comes amid a broader crypto market downturn, with Bitcoin falling from its all-time high of around $126,000 in October to the $83,000 level as of this writing. This BTC price decline quickly magnified the MSTR stock decrease with little to no premium.
In essence, Strategy has evolved from a traditional software firm into a Bitcoin proxy on the Nasdaq. This has allowed investors indirect exposure to BTC through stock indexes.
However, new index eligibility rules are treating it more like a crypto investment fund than an operating business, which could increase selling pressure.
Strategy’s Bitcoin Accumulation Trend
The journey of Strategy into the Bitcoin market began in August 2020 under Executive Chairman Michael Saylor. The company started converting its balance sheet to BTC and later issued convertible debt and equity to fund further purchases.
In its latest BTC buy, Strategy announced it purchased an additional 487 BTC for approximately $49.9 million. The move reaffirms long-term confidence in Bitcoin’s growth potential, after the company paused purchases in October.
Before this purchase, Saylor faced criticism from stockholders. They accused Saylor of breaking previous assurances and moving forward with MSTR stock dilution for purchasing more Bitcoin.
As of November 17, 2025, Strategy holds 649,870 BTC, according to data from BitcoinTreasuries. At the current BTC price of around $83,000, these holdings are worth roughly $53.9 billion. While the company is still profitable, it is increasingly at risk due to the drop in BTC price.
According to the note from JPMorgan, premium compression eliminates the Strategy’s ability to issue high-priced equity to buy more BTC without diluting shareholders.
Furthermore, the company warned that about 15% further drop in BTC would wipe out gains on its entire position, pushing it into net losses.
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