A JPMorgan analyst team, led by senior strategist Nikolaos Panigirtzoglou, released a research report on December 4. The report noted that while declining Bitcoin hashrate and rising mining costs have both increased downside pressure on Bitcoin, the moves of Strategy (formerly MicroStrategy, ticker: MSTR) are critical to Bitcoin’s near-term outlook.
This means that even though multiple factors are pressuring BTC’s downtrend, miners are not the key variable for Bitcoin’s next move; Strategy’s position size and its stability are more decisive. Strategy is important because, as the world’s largest Bitcoin treasury company, it holds nearly 650,000 BTC worth close to $60 billion. It has almost single-handedly pushed the “DAT (Digital Asset Treasury) era” into the spotlight. The first DAT company most people ever heard of was Strategy.
Therefore, when Bitcoin pulls back from the highs, Strategy naturally becomes the eye of the storm: Can it withstand the pressure? Will it sell BTC? Will it be kicked out by MSCI? Are institutions already falling out of love with it?
Understanding Strategy's Financial Health: The mNAV Metric
First, a quick concept: mNAV refers to the ratio of enterprise value to Bitcoin holdings. If mNAV is above 1, it’s naturally positive; if it’s below 1, it’s negative.
On November 13, Strategy’s mNAV (market cap / Bitcoin NAV ratio) dropped to 0.993. This is an extremely symbolic dividing line: the company’s market cap had fallen below the value of the Bitcoin it holds. While this is not a “liquidation line,” the symbolism is strong, indicating that markets are discounting Strategy’s “business value beyond Bitcoin.”
mNAV is closely tied to market cap. By early December, Strategy’s market cap was down to just $60.09 billion. Compared with the peak on October 7, in less than two months Strategy’s BTC market value shrank by $20 billion. Even more ironic: during this market-cap drawdown, Strategy added nearly 10,000 BTC.
In other words, the more it buys, the more it falls; the more it falls, the more it buys, acquiring assets all the way into a $20 billion market-cap wipeout. That has led the market to question whether Strategy can sustain a long-term BTC treasury strategy, especially given its average cost basis of roughly $74,436.
Earnings Pressure and Shifting Accumulation Strategies
The company has experienced significant earnings pressure, with net profit declining from $10 billion in Q2 to $2.8 billion in Q3, a 72% decrease. Furthermore, BTC holdings growth hit the slowest quarter in a year, with only a 43,000 BTC increase. The STRC preferred dividend also increased to 10.5%.
Debt pressure mainly comes from cumulative interest payments over the coming years. CryptoQuant reported that Strategy’s monthly BTC purchases fell dramatically from 134,000 BTC to 9,100 BTC, and in the most recent month, only 135 BTC were purchased, suggesting preparation for a bear market.
Put differently, the previous aggressive playbook of “issuing shares to buy Bitcoin” has slowed. This inevitably raises the question: if the market continues lower, can Strategy still hold up? Will it sell the BTC it accumulated?
Strategy Faces a Triple "Eye of the Storm"
Strategy is currently navigating a precarious situation, facing three significant concerns:
1) The Market's Biggest Fear: Will Strategy Sell Bitcoin?
This is the core of nearly every debate. If Strategy sells, it could mean massive sell pressure on the market, potentially leading to a flash crash in BTC and the collapse of the DAT model.
However, Bitwise's view is categorical: Strategy will not sell, at least not in the short term. The reason is simple: Strategy remains quite liquid, with a sufficient funding situation. On December 3, Strategy’s CEO disclosed that the company established a new $1.4 billion reserve fund to cover dividends and interest expenses over the next 21 months. Crucially, this is cash raised via financing with no interest expense, meaning Strategy does not need to sell BTC for at least 21 months.
Nearly two years is enough time to span an entire bull-bear transition. While BTC selling may not be an immediate concern, this move also signals Strategy shifting from aggressive accumulation toward a more conservative liquidity strategy.
The most critical data point is that the nearest debt maturity is in 2027, amounting to $1 billion, which is almost negligible relative to a $60 billion BTC position. In other words, over the next two-plus years, there is no “hard event” that forces selling.
Furthermore, Michael Saylor controls 42% of the voting power and is a steadfast Bitcoin believer. In 2022, when Strategy’s stock collapsed, Saylor still did not sell a single coin, setting a precedent for his commitment.
2) The Second Eye of the Storm: Will MSCI Remove Strategy From Its Indexes?
This controversy is being discussed intensely in institutional circles. MSCI believes that MSTR and other digital asset treasury companies are closer to holding companies than operating companies. MSCI’s investable indexes typically do not include holding companies such as REITs, and since many digital asset treasury companies focus primarily on buying and holding crypto assets, MSCI argues they should not be included.
As a result, MSCI placed Strategy, Riot, Marathon, and 38 other companies on a potential exclusion list. The implications are significant, as nearly $17 trillion in global assets are benchmarked to these indexes. JPMorgan estimates that if Strategy is removed from benchmark indexes, index funds could be forced to sell up to $2.8 billion of MSTR stock; if other indexes follow, the total could reach $8.8 billion.
That sounds frightening, but some in the market believe such adjustments often have a far smaller impact than expected, and markets tend to price them in ahead of time. A simple example: last year when MSTR was added to the Nasdaq 100, it required about $2.1 billion of buying, but the stock barely moved.
JPMorgan’s latest research also notes that the market has already priced this in, and even if it is removed, it could become a “bad news realized” bullish event.
In response to MSCI’s move, Saylor stated directly that Strategy has a software business (annual revenue of $500 million), and Bitcoin is the company’s “productive capital.” He emphasized that DAT is not a fund, nor a trust, and that index classification cannot define Strategy.
3) The Third Storm: Institutions Are Quietly Exiting Strategy
This represents a truly “structural” shift. Wall Street giants are proactively reducing exposure, and the numbers are striking. In Q3, large institutions proactively reduced positions by $5.4 billion. During this period, BTC was around $95,000 and MSTR traded sideways.
In other words, this wasn’t forced selling; it was active de-risking. The institutions reducing exposure include Capital International, Vanguard, BlackRock, and Fidelity.
This sends a powerful signal: Wall Street no longer sees MSTR as the only way to get Bitcoin exposure. The reason is simple: Spot ETFs are now mature, custody infrastructure is established, MSTR’s volatility is not identical to BTC, and MSTR also carries operating risk, financing risk, and index risk.
At the end of the day, it’s still a compliance issue. Institutions obtain Bitcoin exposure through ETFs in a purer, more transparent, and more compliant way. That makes MSTR no longer a “must-have,” only an “optional add-on.”
After all this analysis, it’s undeniable that MSCI’s decision on January 15 remains crucial for both Strategy and Bitcoin’s trajectory. If removed, it may only bring limited downside pressure. If MSCI keeps Strategy in its indexes, both Strategy and Bitcoin “could rebound strongly.”
Conclusion: Strategy as the First True DAT Stress Test
Some worry Strategy could become the next Luna, but that possibility is very small. The root causes of LUNA’s collapse were an algorithmic stablecoin model, on-chain liquidity rupture, and homogeneous selling triggering a death spiral. Strategy’s structure is completely different:
- •It holds a real asset: BTC.
- •There is no liquidation line.
- •There is no forced collateralization.
- •There is no on-chain bank-run mechanism.
- •There is no short-term refinancing wall.
- •It has a $1.4 billion cash reserve.
- •It has a safety window with no debt maturities before 2027.
The real questions are: Can Strategy continue to serve as the flagbearer of the DAT model? Can it continue to attract institutional capital? In a bear market, how long can it really endure?
This storm is not just Strategy’s battle; it is the first true stress test of the DAT narrative. If it holds, DAT could become a core theme of the next crypto cycle. If it cannot, the entire story of “companies using their balance sheets to buy BTC” may be re-examined.
