Strategy Shares Face Existential Threat from Index Exclusion

Michael Saylor's bitcoin empire is confronting what could be its most severe crisis to date, with his company Strategy witnessing a dramatic collapse in share value just one year after reaching record highs of $543. Friday's trading session saw the stock decline an additional 3%, with analysts warning this may represent merely the initial phase of a much larger downturn. JPMorgan analysts project that forced selling could extract up to $8.8 billion from the stock, triggered by a pivotal index decision that fundamentally challenges the company's business model.

The investment bank JPMorgan has raised significant concerns about an upcoming determination by index provider MSCI scheduled for January 15, 2026. The decision will establish whether companies holding more than 50% of their assets in digital currencies can remain part of conventional stock indices. For Strategy, the implications could be devastating.

The scale of potential outflows presents a sobering picture:
- $2.8 billion in immediate outflows from MSCI indices alone
- Up to $8.8 billion if competing index providers implement similar restrictions
- Approximately $9 billion of market capitalization currently held by passive index funds

Should exclusion occur, these funds would be compelled to execute automatic, mechanical selling without consideration for share price, potentially triggering a mass exodus from the stock.

Bitcoin Holdings Become a Liability

Strategy's substantial bitcoin portfolio, consisting of 649,870 bitcoin acquired at an average price of $74,433 and valued at approximately $54 billion, has transformed from an asset to a potential liability. The company's shares now trade 68% below their November 2024 peak, representing the second-worst decline since Strategy adopted its bitcoin-focused approach in April 2020.

Of particular concern to investors is the evaporation of the stock's premium relative to its underlying bitcoin holdings. The "market-implied net asset value" multiple has collapsed to just 1x, indicating the shares now trade essentially at the value of their bitcoin reserves with no additional premium.

Should investors sell immediately? Or is it worth buying Strategy?

This premium previously formed the cornerstone of Saylor's strategy: issuing new shares at elevated prices to acquire additional bitcoin, thereby creating a self-reinforcing cycle that propelled the share price upward. That mechanism appears to have broken down.

Leadership Battles Mounting Concerns

Executive Chairman Michael Saylor has taken to social media to counter growing investor anxiety, asserting that "Strategy is not a fund, trust, or holding company. We are a publicly-traded operating business with a $500 million software division."

The billionaire executive highlighted the company's successful completion of five public bond offerings totaling over $7.7 billion during 2025, while promoting Strategy's bitcoin-backed preferred shares as "revolutionary treasury instruments." Despite these efforts, market confidence continues to erode as the stock maintains its downward trajectory.

Critical Period Ahead

The coming 60 days represent an existential challenge for the company. A further 15% decline in bitcoin's value would push Strategy's entire holdings into unrealized loss territory. Simultaneously, the January index decision could unleash a selling frenzy that would effectively banish the company from mainstream institutional investment portfolios.

The company's second application for inclusion in the S&P 500 index remains in limbo. Despite meeting quantitative requirements, the index committee bypassed Strategy in September, selecting instead Robinhood and AppLovin for inclusion.

Once celebrated as Wall Street's bitcoin champion, Strategy now fights for its survival as a relevant equity investment.