According to PANews, despite meeting technical qualifications, Strategy's (MSTR) application to join the S&P 500 index has been denied. JPMorgan suggests this reflects growing market caution towards companies acting as Bitcoin funds. This decision not only disappoints Strategy but also impacts other firms adopting a similar approach of accumulating Bitcoin as a reserve on their balance sheets. JPMorgan notes that while Strategy's inclusion in other major indices like the Nasdaq 100 and MSCI has quietly facilitated Bitcoin's entry into retail and institutional portfolios, the S&P 500's decision may signal the limits of this trend and could prompt other index providers to reconsider the inclusion of Bitcoin-heavy companies.
JPMorgan also highlights that Nasdaq requires shareholder approval before companies issue new shares to purchase cryptocurrencies, adding to the pressure. Strategy has abandoned its commitment to not dilute equity and is willing to issue shares at a low price-to-earnings ratio to buy Bitcoin. Currently, corporate crypto reserves face challenges such as weak stock prices and slowed issuance, leading to waning investor interest. This raises questions about the sustainability of their model, with investors and index providers potentially favoring crypto companies with actual operational businesses.
