Investors Brace for Potential Crypto Sell-Off Following MSCI Review
Recently published reports by MSCI highlight the risk of excluding digital asset treasury firms from global investable indexes, and the consequent crypto-asset linked selling, for which the crypto markets are already under pressure for.
A report published by BitcoinForCorporations, from which these firms are likely to be focused on, has a collective target of around 10 to 15 billion dollars of evaluated float adjusted market capitalization, and has a total exceedance of 110 billion dollars of market capitalization. Out of this and within Strategy alone, it makes to be roughly 75% of this target.
With the potential Strategy disqualification, JP Morgan expects outflows to be around 2.8 billion dollars, which reflects the largest selling pressure over the crypto market. Other companies under review are expected to result in around 11.6 billion dollars in total investor outflows. Continued pressure from these outflows is expected to result in considerable under pressure crypto prices over a 3-month period.
Currently, MSCI is reviewing digital assets-focused investment entities to assess their eligibility for index inclusion. MSCI was expected to make a final decision by the end of 2023, but the deadline was extended to January 15, 2026, after questions regarding the 2023 decision arose in October.
39 companies, among them Strategy, Riot Platforms, Marathon Digital Holdings, and Sharplink Gaming, have been preliminary constituents of the index. This analysis is focused on both potential and existing index constituents.
To this possible index exclusion, Strategy, which is the company in focus, has attempted to negotiate with MSCI. Strategy’s Adrress, Saylor, stated that focus has been, and continues to be, on possible negotiations before the deadline, January.
Resistance to MSCI’s proposal from the industry has also increased. Critics claim that the index based on a single balance sheet criterion is too narrow. “The rule would remove companies, and their customers’, revenue, and operations unchanged,” states the report. This group has requested MSCI to classify companies based on their operations, rather than the arbitrary balance of their treasury.
Crypto-asset manager Bitwise supported caution from firms whose digital assets are to be included in new proposed index based on subjective criteria since this would adversely impact the transparency and consistency of the index.
Strategy CEO Phong Le further pointed to the imbalance of scrutiny in the criteria since companies whose treasury assets include commodities such as oil do not get the same scrutiny. Strategy has kept its position in the Nasdaq 100 index, a position unchanged following the most recent index rebalancing, despite the public comments.
With the January 2026 decision now just over 2.5 years away, investors are encouraged to pay close attention to the MSCI review. This review has the potential to add considerable value to crypto-linked equity and digital asset treasury holding firms. Also, this review will be of great interest to institutional and retail investors.
