JPMorgan says S&P 500 rejection of Strategy is a 'blow to crypto treasuries'

The S&P 500 index committe's decision last week to reject Strategy's (formerly MicroStrategy) inclusion in the index despite the company technically meeting eligibility criteria is a "blow to crypto treasuries," according to JPMorgan analysts.

The rejection is a setback not only for Strategy, the largest public crypto treasury company, but also for the wave of similar firms that have proliferated in recent months, JPMorgan analysts led by managing director Nikolaos Panigirtzoglou said in a report Wednesday. The index committee has discretion in its selection process, and the decision signals caution over adding companies that have turned their balance sheets into large bitcoin holdings, the analysts said.

Index membership has been a key driver for Strategy’s stock, allowing bitcoin exposure to filter into major benchmarks such as the Nasdaq 100, MSCI USA, MSCI World, and the Russell 2000. The S&P 500 exclusion suggests that this indirect channel into institutional and retail portfolios "may be reaching its limits," the analysts wrote.

The bigger risk, they added, is that other index providers that have already included Strategy or other crypto treasury companies could reconsider their approach.

The S&P 500 rejection comes as other headwinds build. Nasdaq has reportedly begun requiring companies with large crypto holdings to seek shareholder approval before issuing new shares to fund further purchases. Strategy, which had previously pledged not to issue shares at a multiple below 2.5, soon dropped that commitment last month.

Crypto treasury firms have already come under pressure as investors grow wary of crowded trades and weak performance. The analysts said "fatigue" is evident both in share prices and in funding activity, with equity issuance volumes slowing sharply in recent quarters. Debt issuance has continued, but at rising risk premia.

Some corporate treasuries have experimented with more complex financing structures — including bitcoin-backed loans, token-linked convertibles, and structured payouts — to extend the model. But the analysts warned that skepticism is increasing and that capital may shift instead toward crypto companies with operating businesses, such as exchanges and miners, rather than balance-sheet-driven treasury firms.