Has the MSCI removal risk been fully priced in? JPMorgan: Strategy stock price is near the bottom, January 15 is a key turning point

JPMorgan’s latest report points out that the risk of Bitcoin whale company Strategy being removed from the MSCI index due to its high proportion of digital assets has already been fully reflected in its plummeting stock price. Analysts believe that even if MSCI ultimately decides to remove it on January 15, triggering approximately $2.8 billion in passive capital outflows, the negative impact has already been “digested.” Conversely, if it manages to stay in the index, both Strategy and Bitcoin prices could see a strong rebound. This analysis offers a respite for Strategy, which has recently been troubled by liquidity concerns and market sell-off pressure, and reveals the subtle gamesmanship within current market pricing mechanisms.

The Crash Has Come: Why Does JPMorgan Believe “All the Bad News Is Priced In”?

Recently, the biggest market worry about Strategy has been its potential removal from major stock indexes such as MSCI. According to a proposed rule targeting companies whose digital assets make up more than 50% of total assets, Strategy (formerly MicroStrategy) faces the risk of being removed from the MSCI USA Index. The final decision is scheduled for January 15. After the news broke, Strategy’s stock price plunged by about 20% and is now close to the net asset value of its Bitcoin holdings.

However, JPMorgan’s analyst team, led by Nikolaos Panigirtzoglou, has presented a view contrary to prevailing market anxiety: the worst expectations may already be priced into the stock. They point out that after such a steep sell-off, the stock price has “over-reflected” the risk of index exclusion. Previously, JPMorgan estimated that if removed, funds tracking the index might be forced to sell, causing up to $2.8 billion in outflows. But now they believe that much of this potential shock has already been priced in through the earlier stock decline. This means that even if the worst happens, the market’s reaction may be relatively muted, or there could even be a technical rebound after the “bad news is out.”

The core logic behind this judgment is market efficiency. When negative information is widely known and triggers large-scale selling, its impact is already released. Currently, Strategy’s stock price has erased most of the “index premium,” making its valuation almost entirely tied to its 650,000 Bitcoins (worth about $60 billion). Under these circumstances, any further selling pressure caused by index adjustments will have a significantly diminished marginal impact.

Double-Sided Bet: January 15 Ruling as a Key Catalyst

Based on the judgment that “the bad news may be out,” JPMorgan is focusing on MSCI’s final decision on January 15, viewing it as a potential major “upside catalyst.” Analysts explicitly state in the report: “If MSCI’s decision on January 15 is positive (i.e., no removal), then MicroStrategy and Bitcoin are both likely to rebound strongly, returning to levels prior to October 10.” This paints a clear picture of a two-way game for the market.

For Strategy, this is a key “de-risking” moment. Company management is clearly aware of this and has taken proactive steps. According to Reuters, Strategy is in communication with MSCI. CEO Phong Le has also stated that an “educational process” has been initiated with MSCI, aiming to clarify its business model and asset structure to the index provider. Successfully persuading MSCI or prompting a rule change would not only remove a major overhang but also send a positive signal to the market that its business model has gained partial recognition from the traditional financial system, thereby significantly improving investor sentiment.

Therefore, January 15 is no longer just a day to passively await a verdict, but a catalyst day that could trigger sharp repricing. Market attention is shifting from the fear of “will it be removed” to the anticipation of “what if it is not removed.” This shift in sentiment itself is fueling the potential for a rebound.

Key Information on Strategy’s Current Situation and the MSCI Event

Core Risk Event: MSCI is proposing to remove companies whose digital assets account for over 50%, putting Strategy at risk of being removed from the MSCI USA Index.

Decision Date: The final decision is expected to be announced on January 15.

Potential Fund Impact: If removed, could trigger about $2.8 billion in passive fund outflows.

Stock Price Performance: Related news caused the stock price to plunge about 20%; the current price is close to the net asset value of its Bitcoin holdings.

Company Response: Actively engaging with MSCI and conducting “investor education”; has also begun building USD cash reserves to alleviate market concerns about its liquidity.

Bitcoin Price Background: Bitcoin is currently trading at about $93,000, significantly down from the October all-time high of $126,000.

The Liquidity Dilemma and Strategic Reserves: A Deeper Test

Putting aside the short-term MSCI event, Strategy faces a deeper challenge: the inherent fragility of its business model—its high dependence on liquidity and asset prices. As Bitcoin’s price pulls back from its highs, Strategy’s stock price falls in tandem, severely limiting its ability to refinance through additional stock issuance. However, the company still needs to service hefty interest payments from its issued financial instruments (such as perpetual preferred stock), creating potential liquidity pressure.

The biggest market concern is that, to meet operating capital needs or stabilize its stock price, Strategy might be forced to break its “never sell” Bitcoin faith, thus creating enormous selling pressure in an already illiquid crypto market. This fear creates a self-reinforcing vicious cycle: fear of selling leads to selling, selling leads to falling stock and coin prices, and falling prices further intensify selling pressure.

To break this cycle, Strategy has recently taken a key step: beginning to build USD cash reserves. The strategic intent is clear—to demonstrate to the market that it has independent financial capacity to meet short-term obligations, thus dispelling investor fears of being “forced to sell Bitcoin.” In a sense, building cash reserves and communicating with MSCI are two sides of the same coin—both are attempts to carve out legitimacy and credibility for its unconventional “Bitcoin-based” balance sheet within the traditional financial framework.

Narrative Linkage: From Individual Stock Risk to Bitcoin’s Broader Outlook

JPMorgan’s report does not stop at analyzing Strategy individually but widens its perspective to Bitcoin’s overall outlook. The report reiterates its long-term bullish view on Bitcoin, giving a theoretical target of around $170,000 within the next 6–12 months based on a volatility-adjusted gold benchmark model. While this prediction is highly speculative, it is significant in the context of the MSCI decision.

It suggests the investment bank’s logic: Strategy’s current predicament is a “growing pain” and pricing distortion encountered during Bitcoin’s integration into the traditional financial system. Once the uncertainty surrounding MSCI is resolved, regardless of the outcome, market attention will return to Bitcoin’s fundamental narrative. As a “high-leverage listed proxy” for Bitcoin, Strategy’s stock price is highly correlated with Bitcoin itself. Therefore, any progress that eases Strategy’s individual risk or enhances its financial stability could be interpreted by the market as positive for the Bitcoin ecosystem, thereby unleashing pent-up buying power.

Currently, Bitcoin is hovering around $93,000, down about 26% from its all-time high. Market sentiment remains fragile after nearly $2 trillion in market value evaporated since early October. The tug-of-war between Strategy and MSCI has unexpectedly become a micro-experiment in how traditional financial capital views and handles “extreme Bitcoin exposure.” Its outcome, for better or worse, will provide a valuable precedent for more companies considering adding Bitcoin to their balance sheets in the future.

MSCI Index Rebalancing Mechanism and the “Bitcoin Concept Stock” Ecosystem

Why does the MSCI index have such a big impact?

MSCI is one of the world’s largest index providers. Its indexes serve as key benchmarks for global institutional investors in asset allocation and performance measurement. A large number of passive funds (such as ETFs) and active funds aim to track or outperform MSCI indexes. When a stock is added to an MSCI index, it automatically receives billions or even tens of billions of dollars in passive inflows; conversely, removal triggers forced selling by those funds. This “passive flow” has a direct and huge impact on stock prices, making “inclusion” or “exclusion” from the index a perennial market focus for listed companies.

Besides Strategy, what other “Bitcoin concept stocks” are there?

1. Pure Holding Type: Like Strategy, whose main business is acquiring and holding Bitcoin, with a stock price highly correlated with Bitcoin.
2. Mining Companies: Such as Marathon Digital (MARA), Riot Platforms (RIOT), which obtain Bitcoin through mining, with stock prices influenced by both Bitcoin prices and mining costs.
3. Trading and Services: Such as Coinbase (COIN), as a trading platform, whose stock price is more related to market trading activity and fee income.
4. Technology and Infrastructure: Such as Cleanspark (CLSK), involved in mining operations, energy management, etc.

Comparison: Due to its extreme asset structure and massive holdings, Strategy is the most risky and volatile among “concept stocks,” and is also most deeply tied to Bitcoin.

JPMorgan’s report, like a calm surgeon, attempts to dissect a “tumor of expectations” woven by fear for Strategy and the entire market. It points out that the worst pain may already be over, and the upcoming decision could instead become the remedy that relieves paralysis. Regardless of whether the January 15 decision is in or out, this event has profoundly demonstrated a fact: crypto assets and their derivative business models are being ruthlessly scrutinized under the microscope of the traditional financial system, undergoing rigorous testing for liquidity, compliance, and valuation logic. For Strategy and Michael Saylor, this is a stress test of faith and survival; for the broader market, it is a valuable lesson in how Bitcoin, as a new asset class, seeks a pricing anchor within the complex rules of traditional capital. The eye of the storm is often the calmest, and Strategy is right at its center.