MSTR is to be "removed" from the index, JP Morgan's research report "unexpectedly caught in the crossfire," the crypto community calls for "boycott"

Index compilation giant MSCI has proposed to exclude companies holding a large amount of cryptocurrency assets from its global investable market indices, a potential change that is provoking strong opposition from the cryptocurrency community. MicroStrategy, which holds a significant amount of Bitcoin, is at the forefront, while JP Morgan, which released a related research report, has unexpectedly become a target of resistance.

Recently, MSCI issued a statement proposing to exclude "digital asset treasury companies" that hold more than 50% of their balance sheet in cryptocurrencies from its indices, with the policy change expected to take effect in January 2026. JP Morgan shared this news in a research report and was immediately met with fierce criticism from the Bitcoin community, with several cryptocurrency advocates calling for a "boycott" of the financial services giant.

JP Morgan analyst Nikolaos Panigirtzoglou's team warned that if MicroStrategy is ultimately excluded, its valuation will face "considerable pressure." Analysts estimate that of MicroStrategy's approximately $59 billion market capitalization, about $2.8 billion is held by funds that explicitly track the MSCI index, and once the exclusion decision takes effect, it could trigger a forced sell-off of up to $2.8 billion.

This index adjustment could trigger a chain reaction. Excluded cryptocurrency treasury companies will lose inflows from passive funds, and related funds and asset management companies will be forced to automatically sell these companies' stocks, potentially causing negative impacts on the cryptocurrency market.

A Wave of Boycotts in the Cryptocurrency Community

JP Morgan has become the focal point of anger in the cryptocurrency community due to its release of the MSCI index adjustment research report.

Real estate investor and Bitcoin advocate Grant Cardone stated on social media, "I just withdrew $20 million from JP Morgan and am suing them for credit card misconduct." Bitcoin advocate Max Keiser called out, "Take down JP Morgan, buy MicroStrategy and Bitcoin."

This online boycott movement quickly escalated, highlighting the cryptocurrency community's sensitive nerve regarding interventions by traditional financial institutions. Although JP Morgan merely relayed MSCI's policy proposal, as the information messenger, it has borne the brunt of the cryptocurrency community's collective boycott.

MicroStrategy Founder Responds to Policy Change

MicroStrategy founder Michael Saylor broke his silence last Friday to respond to MSCI's proposed policy change.

He emphasized, "MicroStrategy is not a fund, not a trust, and not a holding company. Funds and trusts passively hold assets, while holding companies own investments, and we create, build, issue, and operate."

Saylor defined MicroStrategy as a "Bitcoin-backed structural financial company," attempting to distinguish it from entities that passively hold assets. MicroStrategy is set to enter the Nasdaq-100 index in December 2024, which includes the 100 largest companies by market capitalization on the technology exchange Entering the index allows MicroStrategy to benefit from the passive capital inflows brought by funds and investors holding the Nasdaq 100.

Market Impact of Index Exclusion

According to the new standards proposed by MSCI, any treasury company with cryptocurrency accounting for 50% or more of its balance sheet will lose its index eligibility. These companies will face two options: either reduce their cryptocurrency holdings below the threshold to retain index eligibility or lose passive capital inflows from the market index.

JP Morgan analysts pointed out that this speculation may be one of the factors putting pressure on MicroStrategy's stock price recently. Of the company's approximately $59 billion market capitalization, about $9 billion is held by investment vehicles tracking various indices.

Analysts warn that if cryptocurrency treasury companies affected by the MSCI proposal suddenly sell off, it could force digital asset prices to drop. Passive mutual funds and ETFs tracking the MSCI index will be forced to sell related stocks after the index adjustment takes effect, and this forced selling pressure will have a dual impact on company valuations and the cryptocurrency market.