JPMorgan: Strategy Risks Billions in Outflows if MSCI Drops It

JPMorgan warns that Strategy could face up to $8.8 billion in outflows if MSCI and other index providers remove it from major equity indices due to its Bitcoin-heavy treasury, impacting liquidity and valuation.

JPMorgan has issued warnings that Strategy (MSTR) could face significant financial repercussions if MSCI decides to remove it from major equity indices during its upcoming review on January 15. The bank estimates that such a move could trigger approximately $2.8 billion in passive outflows, with the risk rising to $8.8 billion if other index providers follow MSCI’s lead. Strategy’s heavy reliance on Bitcoin as a core treasury asset has led to concerns about its continued inclusion in key benchmarks like the Nasdaq 100, MSCI USA, and MSCI World. Currently, about $9 billion of its market capitalization is held in passive investment vehicles such as ETFs and mutual funds that track these indices. JPMorgan analysts note that exclusion would likely reduce the company’s liquidity, valuation, and ability to raise capital, while also diminishing its appeal to institutional investors. The stock has already experienced a notable decline, reflecting market anxiety over potential index exclusion. The situation is seen as a critical test for companies with significant digital asset holdings, as index providers reassess their criteria for inclusion.