First Brands Group debt targeted by Apollo Global Management - report
Investing.com -- JPMorgan said the S&P500 index committee’s decision to reject Strategy’s (formerly MicroStrategy) inclusion represents a significant setback for corporate crypto treasuries.
“Last week the S&P500 index inclusion committee rejected MicroStrategy from being included in the most prominent equity index in the world,” analysts at JPMorgan wrote.
“This is signalling that the committee, which can apply discretion in its index inclusion decisions, is concerned about including in the S&P500 index companies such as MicroStrategy that are effectively bitcoin funds.”
The bank argued that the rejection is “a blow to not only MicroStrategy but also other corporate crypto treasuries that have proliferated in recent months in an attempt to replicate MicroStrategy’s crypto accumulation model.”
JPMorgan noted it had previously highlighted that Strategy’s addition to other indices, such as the Nasdaq 100, MSCI USA, MSCI World, Russell 2000, and the CRSP US Total Market Index, had “allowed bitcoin to encroach into investors’ portfolios both retail and institutional.”
However, the S&P500 committee’s rejection “suggests that this encroaching into investors’ portfolios via the back door may be reaching its limits.”
The bank also flagged risks that “other index providers that have already included MicroStrategy or other corporate crypto treasuries into their equity indices might rethink their approach.”
At the same time, Nasdaq has reportedly required certain crypto-holding companies to seek shareholder approval before issuing new shares to fund bitcoin purchases.
JPMorgan added that the rejection comes at a time when corporate crypto treasuries face “overcrowdedness and investor fatigue,” with issuance volumes slowing and share prices under pressure.
The bank warned that “more questions are raised about the sustainability of their business model” as risk premia rise.