JPMorgan says Strategy Bitcoin strategy is now a key driver of the market’s next move

JPMorgan analysts argue that Strategy bitcoin positioning has become a critical signal for traders tracking the next major move in the crypto market.

JPMorgan sees Strategy as pivotal for bitcoin’s near-term direction

According to a new report from JPMorgan, Strategy’s resilience is now more important for bitcoin‘s short-term price path than activity from miners. The bank’s analysts said this holds true even though the world’s largest corporate holder of bitcoin has never sold its coins, while apparent sell pressure from miners has been rising.

Bitcoin’s price has stayed under pressure in recent weeks for two main reasons, the analysts said in their Wednesday note dated Dec. 2. First, there has been a recent bitcoin hashrate decline alongside lower mining difficulty. Second, markets are reacting to ongoing developments around Strategy, listed under ticker MSTR.

The decline in hashrate and difficulty reflects two forces, the team led by managing director Nikolaos Panigirtzoglou explained. China has reiterated its ban on bitcoin mining after a surge in private mining activity, while high-cost miners outside China are retreating as lower prices and elevated energy costs squeeze profitability. However, this mining retreat is only part of the story.

Mining pressure, production costs, and forced selling

Ordinarily, a drop in hashrate boosts miner revenue by increasing each miner’s share of block rewards. That said, the analysts stressed that “the bitcoin price continues to hover below its production cost,” which is creating persistent bitcoin miner sell pressure on the first and largest cryptocurrency.

The JPMorgan team now estimates bitcoin production cost at $90,000, down from $94,000 last month. Their model assumes electricity at $0.05/kWh. Moreover, they estimate that each $0.01/kWh increase in power costs raises production cost by $18,000 for higher-cost producers, intensifying profitability stress.

“As profits get squeezed amid elevated electricity costs and lower bitcoin price, certain high cost miners have been forced to sell bitcoins in recent weeks,” the report said. However, even with this selling, the analysts argued that miners are not the main driver of bitcoin’s next move. Instead, they pointed directly to Strategy’s balance sheet strength and its ability to avoid liquidating its holdings.

Strategy’s enterprise-value signal and balance sheet buffer

JPMorgan highlighted Strategy’s enterprise-value-to-bitcoin-holdings ratio as a crucial indicator. The ratio is calculated as the combined market value of the firm’s debt, preferred shares, and equity divided by the market value of its bitcoin. It currently stands at 1.13 after a sharp decline in the second half of this year.

The fact that the ratio remains safely above 1 is “encouraging,” the analysts wrote. It signals that Strategy is unlikely to face pressure to sell bitcoin to meet dividend or interest obligations. In their view, the market will closely watch whether this measure of microstrategy enterprise value relative to its holdings can stay in positive territory.

“If this ratio stays above 1.0 and microstrategy bitcoin holdings can eventually avoid forced sales, markets will likely be reassured and the worst for bitcoin prices will likely be behind us,” the analysts argued. Moreover, they stressed that this balance sheet dynamic is now a more important anchor for sentiment than marginal mining flows.

Beyond that ratio, the team pointed to Strategy’s recent creation of a $1.44 billion U.S. dollar reserve. According to the report, this fund could cover up to two years of dividend and interest payments. That said, this reserve further reduces the likelihood of forced sales “in the foreseeable future,” helping to stabilize bitcoin’s outlook.

Strategy has also slowed its pace of accumulation. The bank noted there was at least one week that may have passed without any new purchases. However, the firm is still building its treasury. Earlier this week, it announced that its stockpile had crossed the 650,000 BTC threshold, underscoring its role as the largest listed corporate holder.

MSCI exclusion risk and market pricing

Markets are now focused on whether MSCI will remove Strategy and other digital asset treasury, or DAT, companies from its equity indices. JPMorgan expects any decision to have an “asymmetric” impact, meaning downside appears limited while upside could be substantial.

The analysts argued that a removal decision would likely trigger only modest additional weakness because the msci exclusion risk is “already more than priced in.” Since Oct. 10, when MSCI first announced its consultation, Strategy’s share price fell 40% through Dec. 2. Over that period it underperformed bitcoin by 20%, or about $18 billion in market value.

The scale of that underperformance suggests investors have already discounted a potential exclusion from MSCI, and possibly from all major equity indices, the report said. Last month, the analysts estimated that MSCI removal would drive about $2.8 billion in outflows from Strategy, and $8.8 billion if all other indices were to follow.

At the time, Strategy’s co-founder and executive chairman pushed back against the narrative. “Index classification doesn’t define us. Our strategy is long-term, our conviction in bitcoin is unwavering,” he said. However, JPMorgan still views the pending index ruling as a key short-term catalyst.

MSCI decision, miner stress and bitcoin’s soft floor

The analysts said MSCI’s pending Jan. 15 decision will be important both for Strategy and for bitcoin’s trajectory. That said, they reiterated that a negative outcome would likely carry limited incremental downside because of the heavy repricing already seen since October.

By contrast, if MSCI keeps Strategy in its indices, the report argued that both Strategy and bitcoin “will likely rebound strongly” toward their pre-Oct. 10 levels. Those were the levels seen before what the analysts described as the largest crypto liquidation event in history, triggered by policy headlines and risk-off flows.

JPMorgan also tied the market outlook back to mining economics. The team warned that if bitcoin’s price falls below their revised production-cost estimate of $90,000 and stays there for an extended period, as it did in 2018, more miners will come under pressure. Moreover, this would likely push modeled production costs even lower.

Historically, production cost has acted as a “soft floor” or support level for the asset, they noted. The analysts added that this cost anchor, combined with corporate balance sheet dynamics at firms like Strategy, may now be more informative than any single bitcoin gold comparison when assessing downside risk.

Volatility-adjusted upside versus current price

Despite the recent turbulence, JPMorgan reiterated its constructive longer-term view. The team’s volatility adjusted bitcoin framework, which compares bitcoin to gold on a risk-normalized basis, still implies a theoretical bitcoin price close to $170,000. Moreover, they see room for that level to be approached over the next 6–12 months if market conditions stabilize.

In the spot market, bitcoin is currently trading around $92,340. According to the bank, the gap between present levels and their 170,000 model estimate underscores significant potential upside, provided Strategy can maintain its financial resilience and miners avoid a deeper capitulation wave.

Overall, JPMorgan’s report frames Strategy’s capital structure, MSCI’s index decision and mining economics as the three key variables to watch. Together, these factors will shape whether bitcoin can move past the current stress period and begin to close the gap toward its modeled fair value.