JPMorgan warns S&P 500’s rejection is a ‘blow’ to crypto treasuries

JPMorgan analysts say the S&P 500’s rejection of Strategy (formerly MicroStrategy) despite the firm meeting technical requirements is not just a missed milestone.

It’s a warning shot to the entire sector of companies that have converted their balance sheets into massive Bitcoin bets.

In a report published on Sept. 10, analysts led by Nikolaos Panigirtzoglou described the committee’s decision as a “blow to crypto treasuries.” The index committee holds discretion in its selections, and the rejection signals hesitation toward admitting businesses that resemble Bitcoin funds rather than traditional operating companies.

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“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 analysts wrote, as seen and first reported by TheBlock. “The S&P 500 exclusion suggests that this indirect channel into institutional and retail portfolios may be reaching its limits.”

On Sept. 5, the S&P 500 announced that Robinhood (Nasdaq: HOOD) would join the index, while MicroStrategy (Nasdaq: MSTR), led by Bitcoin evangelist Michael Saylor, was left out despite meeting all the criteria.

The S&P 500 Index is a list of 500 of the largest public companies in the U.S., and only two crypto companies have made it to the index so far.

MicroStrategy rebranded as Strategy earlier this year, doubling down on its identity as the largest public Bitcoin treasury. Its stock has surged in tandem with Bitcoin’s rallies, making the company a proxy for investors wanting exposure to crypto without directly holding tokens

The bigger risk, JPMorgan added, is that other benchmarks may follow suit. “Other index providers that have already included Strategy or other crypto treasury companies could reconsider their approach,” the analysts warned.

According to BitcoinTreasuries.net data, public companies now hold about 1,006,592 BTC (about 4.8% of supply), led by Strategy (MSTR) with 638,460 BTC, far ahead of miners like MARA and RIOT and corporates such as Tesla, Coinbase and GameStop. ETFs and funds collectively custody the most at 1.63 million BTC (iShares, Fidelity, Grayscale and others), while governments and private firms add further concentration.

Eric Balchunas, ETF strategist at Bloomberg had also argued that the rules aren’t applied evenly.

He added:

“Why wasn’t MSTR allowed into the S&P 500 Index despite meeting all the criteria? Because the ‘Committee’ said no. You have to realize SPX is essentially an active fund run by a secret committee.”