Compiled by: Felix, PANews

On December 4, the analyst team at JPMorgan Chase, led by senior strategist Nikolaos Panigirtzoglou, released a research report. The report pointed out that despite the decline in Bitcoin's hash rate and the increase in mining costs intensifying downward pressure on Bitcoin, the movements of Strategy (formerly MicroStrategy, stock code MSTR) are crucial for Bitcoin's recent outlook.

Analysts stated that the recent decline in Bitcoin's hash rate and mining difficulty has brought downward pressure on Bitcoin's price. The decline can be 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, leading to decreased profitability and some miners being forced to sell Bitcoin.

The mining cost of Bitcoin has decreased from $94,000 last month to $90,000. Nevertheless, Bitcoin's price remains below this mining cost, resulting in further selling pressure. Analysts indicated that assuming an electricity price of $0.05 per kilowatt-hour, if the price increases by $0.01 per kilowatt-hour, the mining cost for high-cost miners will increase by $18,000.

Whether mNAV Can Maintain Above 1.0 is Key

Even so, JPMorgan believes that miners are not the key to Bitcoin's next move; rather, the scale and stability of Strategy's holdings are more decisive.

The report emphasizes that whether Strategy can maintain its enterprise 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 approximately 650,000 Bitcoin holdings to pay convertible bond interest or preferred stock dividends. The company's cash reserves of $1.44 billion are also sufficient to cover all cash obligations for the next two years, which would significantly alleviate market panic.

If the 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 may be over. If the ratio falls below 1.0, or if the MSCI index adjustment on January 15, 2026, triggers large-scale passive fund sell-offs of Strategy stock, forcing the company to liquidate Bitcoin, it would trigger a new round of vicious cycles.

The Risk of MSTR Being Excluded from MSCI Has Been "Digested"

Although the market is currently closely watching whether MSCI will exclude Strategy and other digital asset management companies (DAT) from its stock index, JPMorgan stated that the downside risk from the exclusion decision is limited, as this risk "has been fully digested by the market."

Since MSCI first announced consultations on this matter on October 10, Strategy's stock price has fallen by about 40%. Analysts believe this decline indicates that the market has already priced in the risk of being excluded by MSCI, and may even have considered the risk of being excluded from all major stock indices.

Last month, analysts estimated that if MSCI excludes Strategy, it would lead to an outflow of $2.8 billion; if all other stock indices follow suit, it would result in 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 our belief in Bitcoin is unwavering."

Nevertheless, analysts indicated that the decision MSCI makes on January 15 will still be crucial for the trends of Strategy and Bitcoin. If excluded, it may only bring limited downward pressure. If MSCI continues to keep Strategy in its index, both Strategy and Bitcoin "could rebound strongly," returning to levels seen before October 10.

JPMorgan also noted that Bitcoin's mining costs have historically acted as a support level. If Bitcoin's price remains below its mining cost for an extended period, miners may face greater pressure, leading to further declines in mining costs.

However, JPMorgan maintains a long-term optimistic outlook for Bitcoin, stating that theoretically, Bitcoin's price is close to $170,000, which means that if market conditions stabilize, Bitcoin could appreciate significantly in the next 6 to 12 months.

Related articles: Trading Moment: Expectations Rise for RMB to "Break 7", Bitcoin Must Break 96,000 to Confirm Trend Reversal

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