MSCI index plans to remove MicroStrategy, Bitcoin community collectively resists JPMorgan

International index provider MSCI plans to remove companies with more than 50% of their balance sheet in cryptocurrencies from its index system starting January 2026. This policy, revealed through a JPMorgan research report, has sparked a strong backlash in the Bitcoin community. Prominent Bitcoin advocate Grant Cardone has withdrawn $20 million from JPMorgan’s Chase Bank, while Michael Saylor is firmly opposing the classification of his company, MicroStrategy, as a passive investment vehicle. If implemented, this index adjustment could trigger massive outflows of passive capital tracking the index, causing structural shocks to the cryptocurrency market.

Policy Shift Origins: Potential Impact of MSCI Index Adjustment

MSCI, one of the world’s most influential index providers (formerly Morgan Stanley Capital International), is preparing a policy shift that could reshape the digital asset market. According to JPMorgan’s latest research report, MSCI plans to exclude companies with more than 50% of their balance sheet in cryptocurrencies from all its indexes starting January 2026. Although not yet finalized, this proposal has quickly spread from traditional financial channels to the crypto community, raising deep concerns about its potential impact.

From a professional indexing perspective, MSCI’s adjustment is significant. Over $14 trillion globally tracks MSCI indexes, including pension funds, insurance, and sovereign wealth funds. These passive investors strictly follow index constituents—if a company is removed, related funds must simultaneously divest the asset. For MicroStrategy, newly added to the Nasdaq 100 in December 2024, such a policy change could mean an abrupt halt to hundreds of millions in monthly passive inflows.

Market analysts point out that MSCI’s proposal reflects the tightening classification standards by traditional finance for digital asset companies. Defining companies with majority crypto holdings as a “special category” essentially creates new boundaries outside the classic industry framework. While this is technically in line with risk management principles for index construction, it may overlook a key fact—crypto treasury companies like MicroStrategy are pioneering a new model of corporate financial management and structured finance.

Key Elements of the MSCI Proposal

Implementation Date: Starting January 2026

Applicable Standard: Crypto holdings on balance sheet ≥50%

Scope: MSCI global standard indexes and related derivatives

Passive Capital: ~$14 trillion in assets track MSCI index series

Main Targets: MicroStrategy and other Bitcoin-heavy companies

Market Reaction: From Social Media Protests to Actual Fund Withdrawals

The Bitcoin community reacted swiftly and intensely to the MSCI proposal, with the uproar continuing over the weekend. Prominent real estate investor and Bitcoin supporter Grant Cardone announced on X (Twitter) that he withdrew $20 million from JPMorgan’s Chase Bank and plans to sue the bank for improper credit card practices. Cardone’s statement received over 24,000 likes and 3,500 shares, amplifying attention.

More radical calls came from early Bitcoin investor Max Keiser, who directly urged followers to “take down JPMorgan, buy MicroStrategy and Bitcoin.” Keiser’s comments reflect a long-standing sentiment in the Bitcoin community—viewing traditional financial institutions as vested interests opposing the crypto system. This binary narrative resonates widely in the community, though traditional finance professionals may see it as an oversimplification of complex market relations.

MicroStrategy founder Michael Saylor offered a more strategic counter. In his latest public statement, Saylor firmly opposed MSCI’s classification, stressing that MicroStrategy “is not a fund, not a trust, nor a holding company,” but rather a “Bitcoin-backed structured finance company” focused on actively creating, issuing, and operating financial products. This positioning is not just semantic—it could determine whether the company continues to benefit from index-induced passive inflows, a lifeline for a company whose market cap is tightly correlated with Bitcoin’s price.

Market Structure Impact: Chain Reaction from Passive Capital Outflows

If MSCI’s proposal is enacted, affected crypto treasury companies face a dilemma: either reduce crypto holdings below 50% to retain index eligibility, or accept removal and the resulting fund outflows. Either choice would have far-reaching consequences. The former could lead to large-scale crypto asset sales, pressuring market prices; the latter could undermine market valuation logic for such companies, sparking a longer-term crisis of confidence.

From a capital flows perspective, index removal typically occurs in three stages: First, the expectation phase, where forward-looking investors may reduce positions between the policy announcement and implementation; second, the implementation phase, when index funds rebalance en masse on adjustment day; third, the post-adjustment phase, when investors holding the stock solely for index eligibility may continue to exit. Historical data shows companies removed from major indexes average 5–15% additional selling pressure around adjustment dates, with illiquid small caps affected more severely.

For the broader crypto market, this change could have spillover effects. Public companies like MicroStrategy act as “institutional proxies” for Bitcoin, with share prices closely tied to Bitcoin. If these firms face sustained selling due to index changes, it could transmit through market sentiment and wealth effects to the crypto market itself. Especially during periods of low liquidity, this linkage could be amplified, causing unnecessary volatility.

Historical Precedents: Lessons from Index Adjustment Events

There are many historical examples of major market reactions triggered by index adjustments. Perhaps the most famous is Apple’s removal from the Dow Jones Industrial Average in 2013: despite no change in fundamentals, it underperformed the S&P 500 by about 3.2 percentage points during the adjustment window. Another example is Tesla’s inclusion in the S&P 500 in 2020—after the announcement, the stock rose over 40% before the official inclusion, highlighting the power of index eligibility on pricing.

In crypto, similar index adjustments have caused volatility. In 2022, after a major bond index removed crypto-related companies, affected stocks fell an average of 28% over the next three months, 12 percentage points more than the broader crypto market. This gap demonstrates how crucial index eligibility is for valuation—losing it means not only passive outflows but also prompts active managers to reassess, causing further selling.

From a regulatory perspective, MSCI’s proposal also highlights classification challenges for index providers in new fields like digital assets. Traditional industry systems (e.g., GICS) lack categories for companies with large crypto holdings, forcing them into “Other” or “Specialized Finance” buckets. This mismatch fails to reflect business realities and can increase index fund risk, which is a key reason behind MSCI’s move.

Institutional Stance: JPMorgan’s Dual Role Sparks Controversy

Another focal point is JPMorgan’s role. On one hand, as a traditional finance leader, CEO Jamie Dimon has long criticized Bitcoin’s intrinsic value; on the other, the bank distributed research communicating MSCI’s plans, which the Bitcoin community interprets as a conflict of interest—being both referee and player.

From an investment banking perspective, JPMorgan’s actions are consistent with its business logic. Known for strict risk controls and compliance, the bank’s cautious approach to high-volatility assets like crypto is not surprising. As a research provider, it has a duty to alert clients to potentially market-moving index changes. The issue is, when these roles overlap on sensitive topics, questions about neutrality arise.

JPMorgan’s relationship with the crypto community has always been complex. Despite Dimon’s personal skepticism, the bank has invested heavily in blockchain and institutional crypto services, launching JPM Coin and its Onyx blockchain division. This “criticize but don’t abandon” stance is typical for traditional institutions facing disruptive tech—worried about threats to existing models but afraid to miss out on potential revolutions.

Future Scenarios: Policy Negotiation and Market Adaptation

MSCI’s proposal is still in the consultation stage, and the final version may change. Historically, index providers often move from exclusion to gradual acceptance during major industry shifts. For example, during the dot-com era, major indexes were cautious about pure internet companies but eventually created dedicated indexes as the industry matured. Crypto treasury companies may need a similar recognition process.

For potentially affected companies like MicroStrategy, responses may include multiple strategies: active lobbying through industry groups and direct communication to demonstrate their unique business models; optimizing balance sheet structure via debt financing or asset allocation to lower crypto ratios without heavy selling; and strengthening investor relations to show that, even without index eligibility, they can attract sufficient active capital.

Broadly, this episode may accelerate the development of endogenous capital systems in crypto. If traditional index funds are barred from Bitcoin-heavy companies, specialized funds may emerge—or even new blockchain-based financing models. History shows that when traditional finance blocks new asset classes, it often spurs rapid growth of alternative infrastructure—possibly a hidden positive behind this turmoil.

MSCI’s adjustment proposal and the Bitcoin community’s fierce response reflect the increasingly complex interaction between traditional finance and the crypto world. On one side are index providers trying to fit new assets into established risk frameworks; on the other, crypto advocates see this as systemic exclusion. This debate goes beyond technical index rules, touching on the recognition and positioning of digital assets in future finance. As the 2026 decision approaches, this confrontation may set key precedents for broader institutional acceptance.

FAQ

1. How does MSCI plan to adjust its index policy for crypto treasury companies?

MSCI plans to exclude companies with over 50% of their balance sheet in cryptocurrencies from its index system starting January 2026. The policy is under consultation and may be revised, but the core standard is expected to hold.

2. Why is MicroStrategy particularly impacted by this policy?

As a listed company with Bitcoin as its primary asset, MicroStrategy’s crypto holdings far exceed 50% of total assets. After its inclusion in the Nasdaq 100 in December 2024, removal from MSCI indexes could trigger large passive outflows.

3. What is passive capital, and why is it important for index constituents?

Passive capital refers to funds that strictly track specific index constituents and weights, including index funds and ETFs. Roughly $14 trillion globally tracks MSCI indexes. Losing index eligibility means losing automatic buying support from this capital.

4. Are there historical precedents for index changes causing market volatility?

Examples include Apple’s removal from the Dow in 2013 and Tesla’s inclusion in the S&P 500 in 2020, both of which significantly affected stock prices. In 2022, a bond index dropping crypto companies led to affected stocks falling an average of 28% in three months.

5. What role did JPMorgan play in this event?

JPMorgan communicated MSCI’s adjustment plan to clients via research reports. The Bitcoin community sees this as a hostile move by traditional finance, though it is simply fulfilling its research role. The controversy is heightened by CEO Jamie Dimon’s past criticism of Bitcoin.