JPMorgan Analysis: Still Bullish on Bitcoin to $170,000, Strategy Holding Without Selling Is Key Recently

Compiled by: Felix, PANews

On December 4, JPMorgan’s analyst team, led by senior strategist Nikolaos Panigirtzoglou, released a research report. The report indicates that although Bitcoin’s hashrate decline and rising mining costs have intensified downward pressure on Bitcoin, the movements of Strategy (formerly MicroStrategy, stock ticker MSTR) are crucial to Bitcoin’s near-term outlook.

Analysts stated that the recent decline in Bitcoin’s hashrate and mining difficulty has put 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, which reduce profitability, forcing some miners to sell their Bitcoin holdings.

Bitcoin’s mining cost has dropped from $94,000 last month to $90,000. Nevertheless, Bitcoin’s price is still below this mining cost, leading to further selling pressure. According to the analysts, assuming an electricity price of $0.05 per kilowatt-hour, for every $0.01/kWh increase in electricity price, high-cost miners’ mining costs will increase by $18,000.

The key is whether mNAV can stay above 1.0

Even so, JPMorgan believes miners are not the decisive factor for Bitcoin’s next move; the size and stability of Strategy’s holdings are more crucial.

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 driver for Bitcoin’s recent price movement.

Currently, the ratio is about 1.13. As long as it stays above 1.0, Strategy does not need to use its roughly 650,000 Bitcoin holdings 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 greatly alleviate market panic.

If the ratio stays above 1.0 and Strategy ultimately avoids 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 sell-off of Strategy stock is triggered by MSCI index adjustments on January 15, 2026, forcing the company to liquidate Bitcoin, this would trigger a new vicious cycle.

The risk of MSTR being removed from MSCI is “priced in”

Although the market is currently closely watching whether MSCI will remove Strategy and other digital asset management companies (DAT) from its stock indices, JPMorgan states that the downside risk from such a removal is limited because the risk has already been “fully priced in” by the market.

Since October 10, when MSCI first announced the consultation, Strategy’s stock price has dropped by about 40%. Analysts believe this decline shows the market has already priced in the risk of being excluded from MSCI, and may have even factored in the risk of being excluded from all major stock indices.

Last month, analysts estimated that if MSCI removed Strategy, it would lead to $2.8 billion in outflows; if all other stock indices followed suit, it would lead to $8.8 billion in outflows. At the time, Strategy co-founder and executive chairman Michael Saylor stated, “Index classification does not define us. Our strategy is long-term, and our conviction in Bitcoin is unwavering.”

Nevertheless, analysts noted that MSCI’s decision on January 15 will remain pivotal for Strategy and Bitcoin’s trajectory. If removed, it may only cause limited downside pressure. If MSCI continues to include Strategy in its indices, both Strategy and Bitcoin could “rebound strongly,” returning to pre-October 10 levels.

JPMorgan also pointed out that Bitcoin’s mining cost has traditionally served as a support level. If Bitcoin’s price remains below its mining cost for an extended period, miners may face greater pressure, leading to a further drop in mining costs.

However, JPMorgan maintains a long-term bullish outlook for Bitcoin, theoretically placing Bitcoin’s price close to $170,000, meaning that if market conditions stabilize, Bitcoin could appreciate significantly over the next 6 to 12 months.

Related reading: Trading Moment: Expectations Rise for RMB to “Break 7”; Bitcoin needs to break through 96,000 to confirm trend reversal