The specter of a large-scale pressured sale of crypto-related shares has been averted.
Nonetheless, this reprieve comes with a structural downside that essentially adjustments the economics of “Bitcoin Treasuries” buying and selling.
On January 6, MSCI, a number one benchmark supplier for world fairness and ETF markets, introduced that it’s going to retain Digital Asset Treasury Firm (DATCO) in its world index for assessment in February 2026, and can exclude firms like Technique (previously MicroStrategy).
It said:
“In the intervening time, the present index remedy of DATCOs recognized on the MSCI-published Tentative Record of Firms with Digital Asset Holdings of fifty% or Extra of Whole Belongings will stay unchanged.”
Following the information, Technique’s Govt Chairman Michael Saylor highlighted the victory of staying within the benchmark.
Nonetheless, the index supplier concurrently launched a technical freeze on the variety of shares of those firms. It was defined as follows.
“MSCI won’t implement will increase within the variety of shares (NOS), international inclusion issue (FIF), or home inclusion issue (DIF) for these securities. MSCI will defer additions or measurement phase transitions for all securities included within the reserve checklist.”
With this resolution, MSCI successfully severed the hyperlink between new inventory issuance and automated passive purchases.
This transfer signifies that the “upside” mechanics of index buying and selling have been dismantled, simply by eradicating the “draw back” of pressured liquidations.
Finish of machine bidding
The instant market response, with Technique shares surging greater than 6%, mirrored aid {that a} liquidity disaster had been averted.
Notably, JPMorgan instructed {that a} full exclusion might have triggered a detrimental sale of MSTR of $3 billion to $9 billion.
This quantity would seemingly have triggered the inventory value to break down and drive the corporate to liquidate its Bitcoin holdings.
However the removing of the specter of exclusion masks the brand new actuality: the automated demand lever for shares is gone.
Traditionally, when Technique issued new shares to fund its Bitcoin acquisition, the index supplier would ultimately replace its share depend.
In consequence, passive funds that observe the index are mathematically pressured to purchase a proportionate portion of recent points to reduce monitoring error. This created a dependable supply of demand that was impartial of value, permitting us to soak up dilution.
The brand new “freeze” coverage breaks this loop. Even when the technique considerably will increase its float to lift capital, MSCI will successfully ignore these new shares for index calculation functions.
The corporate’s weight within the index won’t enhance, so ETFs and index funds won’t be pressured to purchase new paper.
Market analysts say this variation will drive a return to fundamentals. With out the backstop of demand to trace a benchmark, Technique and its friends are actually pressured to depend on energetic managers, hedge funds and retail buyers to soak up new provide.
Quantifying the liquidity hole
To grasp the magnitude of this variation, market researchers mannequin the “bid decline” that issuers must take care of going ahead.
Cryptocurrency analysis agency Bull Principle quantified this liquidity hole in a notice to shoppers. The corporate envisioned a hypothetical state of affairs involving a monetary firm with 200 million shares excellent. About 10% of its excellent shares are sometimes held by passive index trackers.
Within the bull idea mannequin, if the corporate points 20 million new shares to lift capital, the outdated index construction would ultimately obligate the passive fund to buy 2 million of these shares.
If the theoretical value is $300 per share, this mechanically equates to $600 million in price-independent shopping for stress.
Beneath MSCI’s new freeze, Bull Principle identified that the $600 million bid would drop to zero.
With this in thoughts, it states:
“The technique now could be to discover a non-public purchaser, provide a reduction, or elevate much less cash.”
Which means that pressured demand from index funds has been eliminated.
Subsequently, this can be a main hurdle for Technique, which issued greater than $15 billion in new shares all through 2025 to aggressively accumulate Bitcoin.
If the corporate needs to duplicate an issuance of that measurement in 2026, it’ll seemingly accomplish that in a market with out passive assist. With out such a structured bid, the chance of value correction throughout a dilution occasion will increase considerably.
ETFs emerge as quiet winners
MSCI’s resolution to cap these firms, somewhat than banish them or depart them alone, additionally considerably modified the aggressive dynamics of the asset administration sector.
Over the previous 12 months, U.S. spot Bitcoin ETFs have matured as an asset class and attracted vital curiosity from institutional buyers. In reality, this rally prompted MSCI’s former mother or father firm Morgan Stanley to file for its personal spot Bitcoin ETF.
From this benefit, Technique competes with these fee-incurring Bitcoin ETFs and presents buyers a approach to acquire passive Bitcoin publicity by way of a company construction. The brand new guidelines scale back DATCO’s capacity to scale effectively by way of the inventory market by freezing its index weighting.
If Technique’s capacity to lift low cost capital declines, giant capital allocators could rotate capital away from company shares and into spot ETFs that don’t contain company operational threat or premium-to-NAV fluctuations.
This circulation of funds will straight profit issuers of spot ETFs, together with giant Wall Road banks, successfully recouping charges that have been beforehand mirrored within the fairness premium.
By neutralizing the “flywheel” impact of monetary methods, index suppliers could have unintentionally or deliberately leveled the taking part in subject in favor of conventional wealth administration merchandise.