JPMorgan Rumored to be Short Strategy Stock as Crypto Community Demands Boycott

TLDR

• JPMorgan issued a report warning that Strategy (formerly MicroStrategy) could be removed from the MSCI USA Index due to its Bitcoin holdings exceeding 50% of total assets
• The bank’s analysts estimate removal could trigger $2.8 billion to $8.8 billion in outflows from the stock
• Crypto community accuses JPMorgan of timing the bearish report to manipulate MSTR stock price, with some claiming the bank holds a large short position
• Strategy CEO Michael Saylor responded that his company is an operating business with active financial strategy, not just a passive Bitcoin holder
• Reports suggest thousands of JPMorgan customers are closing accounts in protest, while some predict a potential short squeeze if MSTR stock rallies 40-50%

JPMorgan analysts released a report last week stating that Strategy, formerly known as MicroStrategy, may be excluded from major equity indices. The warning centers on Strategy’s Bitcoin holdings, which now represent over 50% of the company’s total assets.

The bank’s analysts specifically cited the MSCI USA Index as reviewing whether companies with substantial digital currency holdings should remain in traditional equity indices. Strategy owns more than 649,000 Bitcoin, making it the largest public holder of the cryptocurrency.

Potential Outflows and Market Impact

JPMorgan estimates that exclusion from the MSCI index could force approximately $2.8 billion in automatic selling. If other index providers follow MSCI’s decision, the total outflows could reach $8.8 billion according to the bank’s calculations.

The report comes as Bitcoin has dropped over 30% from its all-time highs. The cryptocurrency currently trades around $86,000, while the total crypto market has lost $1 trillion in value over the past month.

Strategy’s stock has fallen 69% from its record high of $543 per share. The timing of JPMorgan’s report during this downturn has drawn criticism from the crypto community.

MicroStrategy Incorporated, MSTR

MSCI published a consultation document on October 10 regarding the eligibility of companies with large digital asset holdings. The final decision on Strategy’s inclusion is expected by January 15.

Strategy CEO Michael Saylor responded to the concerns by stating his company operates as a software business with an active financial strategy. He told CoinDesk that JPMorgan’s report was “alarmist” and that any potential exclusion was likely already reflected in the stock price.

Community Response and Short Squeeze Speculation

Social media users have accused JPMorgan of recycling old news to pressure Strategy’s stock price. Crypto influencer Adrian claimed the bank based its report on the expired October consultation document to accelerate selling.

Some community members have called for boycotts of JPMorgan. Businessman Grant Cardone stated he moved his entire account to a different bank in response to the situation.

Reports indicate share lending for Strategy stock has increased, allowing brokers to lend shares to short sellers. This has fueled speculation that JPMorgan may hold a short position on the stock.

Broadcaster Max Keiser suggested that a 50% rise in Strategy’s stock price could create problems for any large short positions. Pro-crypto lawyer John Deaton referenced the GameStop short squeeze, hoping for a similar outcome.

The situation highlights tensions between traditional finance and companies adopting Bitcoin treasury strategies. JPMorgan has expanded its own crypto services, including plans to accept Bitcoin and Ethereum as loan collateral according to October reports.

Strategy continues to maintain its Bitcoin holdings as part of its corporate treasury approach. The company’s stock and Bitcoin positions remain subject to market volatility as the MSCI decision date approaches.

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