JP Morgan analysts highlight that Strategy's recent underperformance is more about its potential exclusion from the MSCI than crypto prices.
The bank noted that Strategy risks $8.8 billion in outflows as a potential MSCI exclusion could force it out of other major indices.
Strategy's premium to its net asset value has collapsed in recent months alongside its Bitcoin buying pressure.
Strategy's steep decline is more about fears that MSCI may remove the company from its index than about crypto prices, according to JP Morgan analysts in a Wednesday note.
Strategy could be removed from MSCI
JP Morgan analysts led by Nikolaos Panigirtzoglou noted that Strategy's recent underperformance stems from growing anxiety over a potential MSCI exclusion rather than Bitcoin price movements.
The bank warned that the company could face $2.8 billion in outflows if removed from MSCI indices alone, with the figure rising to $8.8 billion if other index providers follow suit.
"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.
Strategy currently sits in major benchmarks, including the Nasdaq-100 and MSCI USA. Over $9 billion of the company's ~$50 billion market capitalization is held in passive funds that track these indices. This embedded presence has allowed Bitcoin exposure to seep indirectly into both retail and institutional portfolios — a dynamic that could sharply reverse following an exclusion.
MSCI announced on October 10 that it is consulting on a proposal to exclude companies whose primary activity is Bitcoin or digital asset treasury management if those holdings represent 50% or more of their total assets. The consultation runs through December 31, with a decision scheduled for January 15, 2026 — a date JP Morgan described as "pivotal" for the stock.
The analysts argued that losing major index status would deal a reputational blow, raising doubts about Strategy's ability to tap equity and debt markets. They added that such an occurrence could also compress liquidity, making the stock less appealing to large institutional investors.
Strategy's premium to its net asset value has collapsed in recent months alongside a slowdown in its Bitcoin buying pressure. JP Morgan warned that an MSCI decision against the company would push its market value relative to its Bitcoin holdings or mNAV "closer to 1," effectively valuing the company almost entirely as a Bitcoin holding vehicle.
However, Strategy appears to be ramping up its accumulation activity heading into Q4. The company bought 8,178 BTC on Monday, its largest single purchase since July, after months of mild buying activity.
Strategy's shares closed with a 5.02% decline on Thursday, per Google Finance data. Its mNAV has already fallen to 1.05, according to CoinGecko data.
