The JPMorgan analyst team, led by senior strategist Nikolaos Panigirtzoglou, released a research report on December 4. The report notes that although the decline in Bitcoin's hash rate and the increase in mining costs have intensified downward pressure on Bitcoin, the movements of Strategy (MSTR.US) are crucial for Bitcoin's near-term outlook.
Analysts say that the recent decline in Bitcoin's hash rate and mining difficulty has put downward pressure on Bitcoin prices. The decline is attributed to the People's Bank of China reiterating its ban on Bitcoin mining and trading, as well as high-cost miners exiting due to rising electricity prices and falling Bitcoin prices, which has led to some miners being forced to sell Bitcoin.
Bitcoin's mining costs have decreased from $94,000 last month to $90,000. Nevertheless, Bitcoin's price still remains below this mining cost, leading to further selling pressure. Analysts state that assuming an electricity price of $0.05 per kilowatt-hour, if electricity prices rise by $0.01 per kilowatt-hour, high-cost miners' mining costs will increase by $18,000.
Whether mNAV can be maintained at 1.0 is key.
Even so, JPMorgan believes that miners are not the key to Bitcoin's next move; the size and stability of Strategy's holdings are more decisive.
The report emphasizes that whether Strategy can maintain its corporate value to Bitcoin holdings ratio (mNAV) above 1 and avoid selling Bitcoin is the key driving factor for Bitcoin's recent price movements.
Currently, this ratio is about 1.13. As long as it stays above 1.0, Strategy does not need to use its holdings of approximately 650,000 Bitcoins to pay convertible bond interest or preferred stock dividends. The company's $1.44 billion cash reserves are also sufficient to cover all cash obligations for the next two years, which will significantly alleviate market panic.
If this ratio remains above 1.0 and Strategy ultimately manages to avoid selling Bitcoin, market confidence is likely to recover quickly, and the worst period for Bitcoin prices will be over. If the ratio falls below 1.0 or if a large-scale passive fund sells Strategy stocks due to the MSCI index adjustment on January 15, 2026, leading the company to liquidate Bitcoin, it will trigger a new round of vicious cycles.
The risk of MSTR being removed by MSCI 'has been digested.'
Although the market is currently closely watching whether MSCI will remove Strategy and other digital asset management companies (DAT) from its stock index, JPMorgan stated that the downside risk from the removal decision is limited because this risk 'has been fully digested by the market.'
Since MSCI first announced consultations on this on October 10, Strategy's stock price has fallen by about 40%. Analysts believe this decline indicates that the market has already factored in the risk of being removed by MSCI, and it may have even considered the risk of being removed from all major stock indices.
Last month, analysts estimated that if MSCI removes Strategy, it would lead to an outflow of $2.8 billion; if all other stock indices follow suit, it would lead to an outflow of $8.8 billion. At that time, Strategy's co-founder and executive chairman Michael Saylor stated, 'Index classification does not define us. Our strategy is long-term, and we are steadfast in our belief in Bitcoin.'
Nevertheless, analysts say that MSCI's decision on January 15 will still be crucial for the trends of Strategy and Bitcoin. If removed, it may only bring limited downward pressure. If MSCI continues to keep Strategy in its index, both Strategy and Bitcoin 'may strongly rebound' back to levels before October 10.
JPMorgan also pointed out that Bitcoin's mining costs have historically served as support. If Bitcoin prices remain below its mining costs for an extended period, miners may face greater pressure, leading to further declines in mining costs.
However, JPMorgan maintains a long-term optimistic outlook on Bitcoin, theoretically pricing Bitcoin close to $170,000, which means that if market conditions stabilize, Bitcoin could appreciate significantly in the next 6 to 12 months.
