JPMorgan explained the consequences of removing Strategy from stock indices

Bitcoin’s volatility also significantly increases the vulnerability of Strategy, which, as the largest corporate holder of the first cryptocurrency, owns nearly $60 billion worth of BTC, the bank’s analysts reminded. The company is experiencing difficulties covering operating expenses and servicing its debt. If the price of the first cryptocurrency continues to fall, Strategy may face the need for forced sales of part of its bitcoins, according to JPMorgan.

After the announcement of Strategy’s possible exclusion from MSCI benchmarks, the company’s stock price fell by 20%. They are now trading close to the value of Strategy’s bitcoin reserves, and investors have largely already priced in the effects of a negative scenario, analysts explained.

“The decision to remove Strategy from MSCI indices will have a limited negative impact on the company and the Bitcoin price, since the risk is already fully priced in,” JPMorgan specialists said.

According to the bank’s analysts, if Strategy avoids delisting or forced bitcoin sales turn out to be minor, such a favorable outcome could become a catalyst for renewed interest in the company’s shares from institutional investors.

Earlier, Strategy co-founder and executive chairman Michael Saylor stated that sharp fluctuations in Bitcoin’s price are crucial for the long-term profitability of the first cryptocurrency — because volatility creates opportunities for small, private investors.

See also: "Ethereum Sets New Record for Number of Transactions"

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