Analysis: S&P 500 Rejection of Strategy is a Warning Sign for Corporate Bitcoin Holdings

On September 11th, although MicroStrategy (MSTR) met the technical inclusion criteria for the S&P 500 index, its application to join the index was turned down. JPMorgan holds the view that this reflects a growing cautious attitude towards companies that essentially act as Bitcoin funds. An analyst team led by Nikolaos Panigirtzoglou stated that this discretionary decision made by the index committee is not only a setback for MicroStrategy but also has implications for an increasing number of cryptocurrency holders who are following its strategy of accumulating Bitcoin on their balance sheets. The report indicates that MicroStrategy has been included in other major benchmark indices like the Nasdaq 100 and MSCI indices, quietly facilitating the entry of Bitcoin into retail and institutional portfolios. However, the Wall Street bank warned that the S&P 500's decision may signal a limit to this trend and could lead other index providers to reconsider whether to continue including companies holding large amounts of Bitcoin. The report also mentioned that Nasdaq is said to have started to require companies to obtain shareholder approval before using new stock issuance to purchase cryptocurrency, adding more pressure. MicroStrategy recently gave up its commitment to a non-dilutive equity offering, indicating a willingness to issue shares at a lower multiple to keep funding Bitcoin purchases. Meanwhile, the stock performance of corporate cryptocurrency holders has been weak, and the pace of issuance is slowing down. JPMorgan noted that both equity and debt financing amounts decreased in the last quarter, suggesting a waning interest from investors. This fatigue has raised doubts about the sustainability of the corporate Bitcoin holding model. The report added that while some companies are turning to more complex financing methods, such as Bitcoin-backed loans or token-linked convertible bonds, the continuously rising risk premium may make investors and index providers prefer cryptocurrency companies with operating businesses (such as exchanges and miners) over pure-play Bitcoin holding entities.