JPMorgan: MicroStrategy’s Strategic Holdings Crucial for Bitcoin’s Near-Term Trajectory

A recent research report from JPMorgan’s analyst team, led by senior strategist Nikolaos Panigirtzoglou, published on December 4th, underscores a pivotal dynamic in the Bitcoin market. While declining Bitcoin hash rates and rising mining costs certainly contribute to downward pressure, the firm contends that the strategic movements of MicroStrategy (formerly Strategy, ticker MSTR) are paramount to Bitcoin’s immediate future.

Mining Sector Faces Mounting Headwinds

Analysts point to a recent dip in Bitcoin’s hash rate and mining difficulty as a significant factor exerting downward pressure on its price. This decline is attributed to a confluence of events: the People’s Bank of China’s renewed ban on Bitcoin mining and trading, coupled with the exit of high-cost miners. These miners are struggling with reduced profitability due to escalating electricity prices and a depreciating Bitcoin price, forcing some to liquidate their Bitcoin holdings.

The estimated Bitcoin mining cost has slightly decreased from $94,000 to $90,000 over the past month. However, Bitcoin’s market price remains below this threshold, intensifying selling pressure. JPMorgan’s analysis further suggests that assuming an electricity price of $0.05 per kilowatt-hour, every $0.01 increase per kilowatt-hour would inflate high-cost miners’ operational expenses by an additional $18,000.

The Critical Role of MicroStrategy’s mNAV Above 1.0

Despite these pressures on miners, JPMorgan argues that the mining sector is not the primary determinant of Bitcoin’s next move. Instead, the scale and stability of MicroStrategy’s holdings are deemed more decisive.

The report emphatically states: MicroStrategy’s ability to maintain its enterprise value to Bitcoin holdings ratio (mNAV) above 1.0, thereby avoiding the need to sell its Bitcoin, is identified as the key driver for Bitcoin’s short-term price trajectory.

Currently, this ratio stands at approximately 1.13. As long as it remains above 1.0, MicroStrategy will not be compelled to tap into its substantial Bitcoin reserves—reportedly around 650,000 Bitcoins—to cover convertible bond interest or preferred stock dividends. Furthermore, the company’s $1.44 billion in cash reserves are sufficient to meet all cash obligations for the next two years, a factor that significantly mitigates market panic.

Should the ratio consistently stay above 1.0, and MicroStrategy successfully avoids selling its Bitcoin, market confidence is likely to rebound swiftly, signaling that the worst period for Bitcoin prices may be over. Conversely, a drop below 1.0, or a scenario where a large-scale passive fund sell-off of MicroStrategy shares (potentially triggered by the MSCI index adjustment on January 15, 2026) forces the company to monetize its Bitcoin, could initiate a new negative feedback loop.

MSCI Exclusion Risk: “Already Priced In”

The market is closely monitoring whether MSCI will remove MicroStrategy and other digital asset management companies (DATs) from its equity indices. However, JPMorgan suggests that the downside risk from such a decision is limited, as it has “already been fully digested by the market.”

Since MSCI first announced its consultation on this matter on October 10th, MicroStrategy’s stock price has fallen by approximately 40%. Analysts believe this decline indicates that the market has already factored in the risk of MSCI exclusion, and potentially even the risk of exclusion from all major equity indices.

Last month, analysts estimated that an MSCI exclusion of MicroStrategy could trigger $2.8 billion in outflows, with a broader exclusion across all indices potentially leading to $8.8 billion in outflows. At the time, MicroStrategy co-founder and executive chairman Michael Saylor affirmed, “Index classification does not define us. Our strategy is long-term, and our conviction in Bitcoin is unwavering.”

Nevertheless, analysts emphasize that MSCI’s decision, expected on January 15th, remains crucial for both MicroStrategy and Bitcoin’s trends. If an exclusion occurs, it may only result in limited additional downside pressure. However, if MSCI opts to retain MicroStrategy in its indices, both MicroStrategy and Bitcoin “could see a strong rebound,” potentially returning to pre-October 10th levels.

JPMorgan also reiterates that Bitcoin’s mining cost has historically served as a support level. Should Bitcoin’s price remain consistently below its mining cost, miners could face increased pressure, potentially leading to a further reduction in the mining cost itself.

Despite these near-term volatilities, JPMorgan maintains a long-term optimistic outlook for Bitcoin, with a theoretical price target approaching $170,000. This implies that if market conditions stabilize, Bitcoin could experience significant appreciation over the next 6 to 12 months.