Strategy's (MSTR) bid to join the S&P 500 index was rejected by the index committee despite meeting all technical eligibility criteria, a move JPMorgan analysts describe as a significant setback for the growing trend of companies using balance sheets as de facto bitcoin (BTC) investment vehicles. The discretionary decision reflects heightened caution toward firms that have pivoted to functioning primarily as bitcoin accumulation funds.
Analysts led by Nikolaos Panigirtzoglou noted that Strategy's existing inclusions in other major benchmarks—such as the Nasdaq 100, MSCI USA, MSCI World, and Russell 2000—have provided bitcoin with indirect access to institutional and retail portfolios. The S&P 500 exclusion suggests this backdoor exposure may be nearing its limits, potentially prompting other index providers to reconsider inclusions of bitcoin-heavy companies.
Compounding pressures, Nasdaq has reportedly begun requiring shareholder approval before companies can issue new stock to fund cryptocurrency purchases. Strategy itself recently abandoned its no-dilution pledge, indicating willingness to issue shares at lower multiples to sustain bitcoin acquisitions. JPMorgan highlighted declining equity and debt fundraising volumes last quarter, signaling waning investor appetite and growing fatigue with the crypto treasury model.
The report warns that rising risk premiums may shift capital toward crypto companies with operational businesses (e.g., exchanges, miners) rather than pure bitcoin-holding vehicles. This rejection coincides with weakening share prices and slowing issuance across the crypto treasury sector, raising sustainability concerns for leveraged bitcoin strategies.
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