JPMorgan Flags $12 Billion Threat To Michael Saylor’s Strategy From MSCI And Other Index Exits

JPMorgan warned that Michael Saylor’s Bitcoin treasury firm Strategy faces a $12 billion threat from MSCI and other index providers that may delist the company.

The warning comes after MSCI said in an Oct. 10 statement that it is considering excluding companies whose digital asset holdings represent more than 50% of their total assets from the MSCI Global Investable Market Indexes. Its decision is due on Jan. 15.

If that happens, JPMorgan analysts led by Nikolaos Panigirtzoglou said in a note this week that Strategy may see as much as $2.8 billion in liquidity leave, adding that billions more would follow if other index providers followed its lead.

Passive funds using index-based allocations hold some $9 billion of the Bitcoin buyer’s stock, it said, via indexes including MSCI USA and Nasdaq 100. 

“While active managers are not obligated to follow index changes, exclusion from major indices would certainly be viewed negatively by market participants,” the analysts wrote. 

MSCI said in its statement that some digital asset treasury companies may be more similar to investment funds that are not eligible for inclusion in its indexes. 

Odds that MSCI does exclude Strategy and other digital asset treasury firms from its indexes are ”solidly in favor of it,” Charlie Sherry, head of finance at BTC Markets, told CoinTelegraph. It ”only puts changes like this into consultation when they’re already leaning that way,”

MARA, Metaplanet, Riot Platforms Also At Risk

A preliminary list released by MSCI shows that 38 crypto companies, including Strategy, could be affected by the decision. Among the other firms that are on MSCI’s radar are SharpLink Gaming, Riot Platforms, Marathon Digital, and others. 

Top 10 largest corporate BTC holders (Source: Bitcoin Treasuries)

Saylor Says Strategy Is “Indestructible” As MSTR Plunges Further

Strategy is the largest corporate Bitcoin holder globally. Data from BitcoinTreasuries shows the firm currently has 649,870 BTC on its balance sheet.

But Bitcon’s dizzying 34% collapse since it hit an all-time high of $126,198 on Oct. 6 also hammered Strategy’s stock price, which has plunged more than 56% in the past month, according to Google Finance.

MSTR extended its downtrend with another 5% drop in the past 24 hours while Bitcoin plunged more than 9% to trade at $83,591 as of 3:50 a.m. EST.

Saylor responded to concerns that Bitcoin’s slide could pile more pressure on Strategy in a CNBC interview this week, arguing that Strategy is the “best capitalized company in the crypto economy.”

“We have billions of dollars of liquidity in the equity every day, and our credit instruments are 100 times more liquid than the average preferred equity,” he added. 

He said that Strategy is “engineered to take an 80% to 90% drawdown” and still “keep on ticking.” 

“So I think we’re pretty indestructible,” he said. 

Bitcoin permabear Peter Schiff has called Strategy’s business model “a fraud,” and said in an X post earlier today that Saylor’s firm would “have been better off” had it “bought just about any other asset.”