The threat of a massive sell-off of crypto-linked stocks has been averted.
However, that delay comes with a structural catch that fundamentally changes the economics of the ‘Bitcoin Treasury’ trade.
On January 6, the dominant benchmark provider for the global equity and ETF markets, MSCI Inc., announced it will retain “Digital Asset Treasury Companies” (DATCOs) in its global indices for the February 2026 review, saving companies like Strategy (formerly MicroStrategy) from eviction.
It said:
“For now, the current index treatment of DATCOs, identified in the preliminary list published by MSCI of companies whose digital assets represent 50% or more of their total assets, will remain unchanged.”
Following the news, Michael Saylor, executive chairman of Strategy, praised the victory of remaining in the benchmark.
However, the index provider has simultaneously introduced a technical freeze on the number of shares for these entities. It explained:
“MSCI will not be making any increases in the number of shares (NOS), Foreign Inclusion Factor (FIF) or Domestic Inclusion Factor (DIF) for these securities. MSCI will defer any additions or size segment migrations for all securities on the preliminary list.”
With this decision, MSCI has effectively severed the link between issuing new shares and automatic passive purchases.
This move simply meant that the ‘downside’ of a forced liquidation has been removed, but the ‘upside’ mechanisms of index trading have been dismantled.
The end of the mechanical bid
The market’s immediate reaction, a more than 6% rise in Strategy’s shares, reflected relief that a catastrophic liquidity event was off the table.
Notably, JPMorgan suggested that a complete lockout could have triggered between $3 billion and $9 billion in passive sales of MSTR.
This volume would likely have crushed the stock price and forced the liquidation of Bitcoin holdings.
However, the disappeared threat of exclusion masks a new reality in which the automatic demand for shares has disappeared.
Historically, when Strategy issued new shares to fund Bitcoin acquisitions, the index provider would eventually update the number of shares.
As a result, passive funds that tracked the index were then mathematically forced to purchase a pro rata share of the new issue to minimize tracking error. This created a guaranteed, price-insensitive source of demand that helped absorb the dilution.
Under the new ‘freeze’ policy, this loop is broken. Even if Strategy significantly expands its float to raise capital, MSCI will effectively ignore these new shares for index calculation purposes.
The company’s weight in the index will not increase, and as a result, ETFs and index funds will not be forced to buy the new paper.
Market analysts note that this shift forces a return to fundamentals. Without the backstop of demand that the benchmark tracks, Strategy and its peers must now rely on active managers, hedge funds and retail investors to absorb new supply.
Quantifying the liquidity gap
To understand the magnitude of this shift, market researchers are modeling the “lost bid” that issuers must now navigate.
Bull Theory, a crypto research firm, quantified this liquidity shortage in a note to customers. The company presented a hypothetical scenario involving a treasury company with 200 million shares outstanding, about 10% of which are typically held by passive index trackers.
In the Bull Theory model, if that company issues 20 million new shares to raise capital, the old index mechanism would eventually require passive funds to buy 2 million of those shares.
At a theoretical price of $300 per share, that represents $600 million in automatic, price-insensitive buying pressure.
Under MSCI’s new freeze, Bull Theory noted that the $600 million bid drops to zero.
Considering this, it stated:
“The strategy now must find private buyers, offer discounts or collect less money.”
This means that the forced demand from index funds has been eliminated.
So it poses a significant hurdle for Strategy, which has issued more than $15 billion in new shares in 2025 to aggressively accumulate Bitcoin.
If the company attempts to replicate this issuance size in 2026, it will do so in a market without passive support. Without that structural bid, the risk of a price correction during dilution events increases significantly.
ETFs are emerging as silent winners
MSCI’s decision to restrict these companies rather than expel them or leave them alone has also significantly changed the competitive dynamics in the asset management industry.
Over the past year, US spot Bitcoin ETFs have matured as an asset class and have seen significant institutional interest. This rise has led to MSCI’s former parent company, Morgan Stanley, to file for its own Spot Bitcoin ETF.
From this perspective, Strategy competes with these paid Bitcoin ETFs, offering investors a way to gain passive Bitcoin exposure through an operating company structure. By freezing the index weighting of DATCOs, the new rule worsens their ability to scale efficiently through the equity markets.
If Strategy’s ability to raise cheap capital is curtailed, large allocators can rotate capital out of company stocks into Spot ETFs, which don’t carry the operational risks of a company or the volatility of the premium to net asset value.
This flow of funds would directly benefit spot ETF issuers, including the major Wall Street banks, effectively absorbing the fees previously reflected in equity premiums.
By neutralizing the “flywheel” effect of the treasury strategy, the index provider has inadvertently or intentionally leveled the playing field in favor of traditional asset management products.