Why Did the Tension Arise?
The tension that has emerged between JPMorgan and Strategy (formerly MicroStrategy, MSTR) is actually the visible manifestation of a structural debate that has been building over the past few years, rather than a single report. JPMorgan analysts’ main argument is that Strategy’s balance sheet structure no longer fits the classic definition of a “software company.” While the company’s operating revenues remain relatively limited, the overwhelming dependence of its market value and balance sheet risks on the price of Bitcoin conflicts with the sector and business model classifications used by index providers. Therefore, JPMorgan emphasized that Strategy’s position in major passive funds such as MSCI USA and Nasdaq-100 could be questioned, and that the possibility of exclusion could even be raised.
The critical factor here is that exclusion from indices is not merely a matter of “reputation.” There are very large passive funds that track indices such as MSCI and Nasdaq, and these funds are required to automatically implement index changes. If Strategy is excluded from these indices, these funds will have to sell their MSTR shares. This is precisely the mechanism JPMorgan refers to as a “force-sell”: non-discretionary, mechanical, high-volume sales. In such a scenario, sharp declines in MSTR shares appear likely. Since Strategy’s balance sheet is heavily dependent on Bitcoin, it is argued that sharp sales of its shares could also put pressure on the Bitcoin market through psychological and liquidity channels. One reason the debate has grown so large is timing.
The recent weakness in the Bitcoin price and the leveraged reflection of this weakness in MSTR shares have made the JPMorgan report more “credible” and grounded in a more sensitive market context. While such warnings can be more easily dismissed in a rising Bitcoin market, these scenarios have a much stronger impact on investor psychology during periods of decline or sideways movement. This has led to rumors spreading rapidly and risk perception increasing. Michael Saylor, however, fundamentally rejects these criticisms. Saylor argues that Strategy is still an operational software company and that Bitcoin is a “strategic reserve” and long-term capital instrument on the company’s balance sheet. In his view, how index providers classify a company does not change the company’s economic reality. Furthermore, while Saylor acknowledges that a potential removal from indices could create short-term volatility, he believes it would not disrupt the company’s long-term strategy. Therefore, Strategy’s management is maintaining communication with MSCI and similar institutions, lobbying and fighting for the narrative to ensure the company’s business model is understood correctly. However, the steps taken by Strategy also show that these criticisms are not considered entirely “insignificant.” The company has recently been trying to position itself not just as a Bitcoin holder, but as an active balance sheet manager developing Bitcoin-based financial instruments, borrowing, and capital market products. This approach aims to weaken the perception of being “just a Bitcoin holding” and to paint a more complex, multidimensional company profile in the eyes of index providers.
Discussions with MSCI
It appears that Saylor focused on three main points during the discussions.
- Emphasis on Strategy still being an operational software company. The company’s enterprise software products, license revenues, and customer base are being preserved; Bitcoin is not presented as a replacement activity, but as a strategic reserve held on the balance sheet. Saylor consistently puts forward the argument to MSCI that “Bitcoin acquisition is not the main activity.”
- Bitcoin’s accounting and economic role. Saylor frames Bitcoin not as a passive speculative asset, but as a long-term capital preservation tool and balance sheet optimization element. The issue from MSCI’s perspective is that a large portion of the company’s value has become dependent on the price of Bitcoin. Saylor argues that they should not accept this dependency as an automatic reason for exclusion, i.e., “high volatility = exclusion from the index.” He reportedly cites other index companies with high sensitivity to commodity prices or interest rates as examples.
- If Strategy is removed from MSCI, the argument is being made that this could open the door for other companies with high levels of digital assets, commodities, or alternative reserves on their balance sheets. Saylor argues that this could create an undesirable “shift in standards” for MSCI, posing the risk of indices becoming disconnected from innovative capital structures. This is as much a political debate as it is a technical one for MSCI, as the indices set not only financial but also corporate investment norms.
Conclusion
Index providers’ review of company classifications is a process that could have financial implications, especially considering the weight of passive funds in the market. For a company like Strategy, which has a high market value and whose volatility is already leveraged to Bitcoin, such a review has the potential to put pressure on the share price in the short term. Therefore, JPMorgan’s “force-sell” scenario is technically possible and not a risk that can be completely dismissed.
However, it is still too early to say that this process will automatically lead to a new and widespread systemic crisis. MSCI has not made a definitive decision to remove it, and index providers generally prefer long evaluation processes rather than making sudden and singular decisions. Furthermore, even Strategy’s removal from the indices does not necessarily have to create a chain reaction collapse in the Bitcoin market; it is more likely to manifest as short-term volatility, perception distortion, and risk-averse behavior.
Disclaimer
This content is provided for informational and analytical purposes only. It is not investment advice, financial advice or a recommendation to buy or sell securities or digital assets. The analysis is a discussion of market structure, the interpretations of institutional research and publicly available information at the time of writing. That index inclusion or exclusion decisions are made independently by the index providers and may be altered without notice. Cryptocurrency-related shares are more volatile because of the leverage, sentiment, regulatory developments, and overall market liquidity. Readers should seek their own due diligence and consult qualified financial professionals.
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