Bitcoin-linked swings have put Strategy (Nasdaq: MSTR) in the crosshairs of major index providers, with JPMorgan warning the stock could be cut from the MSCI USA Index and even the Nasdaq 100—changes that could trigger up to $2.8 billion in passive fund outflows, according to Bloomberg. Executive chairman Michael Saylor pushed back, insisting the company remains an operating software business that uses Bitcoin as part of its corporate strategy.
What JPMorgan flagged
In a note cited by Bloomberg, JPMorgan analysts said being dropped from headline indices could drain liquidity, raise funding costs, and narrow the investor base. While active managers can ignore index changes, exclusion often forces index-tracking funds to sell, which can pressure the share price and widen trading spreads.
MSCIs decision is expected by Jan. 15, Bloomberg reported, and the bank estimates as much as $2.8 billion could exit if Strategy is removed. A similar review risk was also flagged for the Nasdaq 100.
Saylors case: Were not a fund
Saylor addressed the concern in a post on X, arguing that Strategy is a publicly traded operating company with roughly $500 million in software revenuenot a fund, trust, or holding company. He described the firms approach as using Bitcoin as productive capital and said the business is actively building and issuing financial products, not just passively holding assets.
Saylor highlighted five public offerings of digital credit securities completed this year$STRK, $STRF, $STRD, $STRC, and $STREtotaling more than $7.7 billion in notional value. He also pointed to the launch of Stretch ($STRC). In his view, the company is evolving into a Bitcoin-backed structured finance and software enterprise capable of innovating in capital markets.
Why an index removal would sting
Large benchmarks like MSCI USA and the Nasdaq 100 are tracked by index funds and ETFs. When a stock is removed, those vehicles typically must sell it quickly. That matters because it can:
- Reduce daily trading volume and liquidity
- Increase borrowing and funding costs
- Limit exposure to investors who only buy index constituents
- Amplify price swings around the effective date
JPMorgan noted that, even though active managers arent forced to replicate changes, markets generally view removals negatively in the short term.
By the numbers
Strategy holds 641,693 Bitcoin (BTC), valued at $52.77 billion at a spot price of $83,800. Bitcoin has been choppy, falling from about $125,000 in mid-October. The downturn has hit other major tokens: Ethereum (ETH) is down 41% over the past three months to $2,780.55, while XRP has slid 35% to $1.97.
MSTR shares trade at $173, down 43% in the last month.
What this means for investors
If Strategy stays in the indices, passive support could remain a backstop during volatile periods. If its removed, selling by index trackers could add pressure in the near term, potentially raising the companys cost of capital just as it leans on market financing tied to its Bitcoin strategy.
On the other hand, Saylors stance suggests the firm is prepared to live outside the index framework if needed, arguing its operating business and structured finance efforts are the core drivernot index classification.
What to watch next
- MSCI USA decision window through Jan. 15
- Any signals on Nasdaq 100 membership reviews
- Further capital markets activity from Strategy (new issuances or product launches)
- Bitcoin price volatility, which feeds through to MSTR sentiment
The bigger picture
Index rules werent designed with Bitcoin-heavy corporates in mind. Strategys clash with index eligibility highlights a growing tension: companies that tie their balance sheets to digital assets can behave more like crypto proxies than traditional operating firms. That can attract committed crypto investors while making benchmark inclusion harderand it leaves share performance more tightly linked to Bitcoins cycles.