For weeks, crypto has felt broken.
We had the biggest liquidation event in the market’s history on October 10th. Bitcoin nuked. ETH and alts fell even harder. Since then, every “bounce” has died on contact.
Everyone blamed U.S. President Donald Trump’s 100% China tariffs, macro, or over-leverage. All are valid explanations for why the market crashed — but they fail to explain why the market has remained perpetually depressed in the following weeks.
The missing piece seems to be a quiet document published the very same day by MSCI, the world’s second-largest index provider. It directly targets the structures that helped power this cycle: Digital Asset Treasury companies (DATs) like Michael Saylor’s Strategy (Nasdaq: MSTR) and others.
Put simply, October 10th wasn’t just “tariff day”. It was also the day the market discovered that one of its largest marginal buyer groups might be structurally crippled in early 2026.
What are DATs and why do they matter?
DATs are publicly-traded companies whose main business is holding bitcoin or other digital assets on their balance sheet: think Strategy-style vehicles that raise equity or debt in traditional markets, use that capital to buy BTC or other tokens such as Ether, and in doing so give investors a leveraged, publicly-listed digital asset proxy.
Since the first DAT emerged in 2020, with what was then called MicroStrategy’s initial purchase of 21,454 bitcoin in August of that year, DATs have become one of the two major structural buyers of digital assets in this cycle. These buyers fall into two categories: spot BTC (or other digital asset) ETFs and related passive vehicles, and DATs that repeatedly issue stock or convertibles, or use other forms of financing, to acquire additional digital assets.
Crucially, DATs have been benefiting from the index inclusion game through a self-reinforcing chain of events. As a DAT grows large enough, it is automatically included in MSCI and other major benchmarks, which forces passive index funds to buy the DAT’s stock to replicate the index composition. This index-driven demand creates additional buying pressure for the shares, pushing the price and market cap higher.
The higher market cap generated by this passive buying also improves liquidity and perceived legitimacy, giving the DAT greater capacity to raise further capital (via equity offerings, convertibles, or other financing) and use the proceeds to purchase additional digital assets, further expanding its holdings and its market cap. In turn, the DAT’s increased market cap translates into a larger index weight, which attracts even more passive flows.
The result is a powerful flywheel effect: index inclusion leads to passive inflows, which lift market cap and index weight, which then expand fundraising capacity and digital asset purchases, feeding back into more index demand. Firms like Strategy are taking advantage of this mechanism.
However, MSCI signaled last month that it may effectively “cut the power” to this flywheel by reconsidering how such DATs are treated in their indices.
What MSCI announced on October 10th
On October 10, 2025, MSCI published a consultation titled “Digital Asset Treasury Companies,” proposing that companies whose primary business is holding bitcoin or other digital assets be reclassified as fund-like vehicles rather than operating companies. Under the proposal, if a firm’s digital asset holdings represent 50% or more of its total assets, it could be excluded from
MSCI’s main equity indexes.
The consultation will remain open until December 31, 2025, with a final decision scheduled for January 15, 2026, and any resulting exclusions set to be implemented as part of the February 2026 index review.
Analysts have run the numbers. JPMorgan, for example, estimated that removing a flagship DAT from MSCI indexes could trigger around $2.8 billion of forced passive outflows, rising to as much as $8.8 billion if other major index providers adopt similar exclusions.
This is more than a passing headline risk for crypto. If MSCI and its peers move ahead, index trackers, pension funds, and other passive vehicles will be forced to sell those stocks, not because they dislike bitcoin, but because their mandates and rulebooks require it. Looking forward, DATs would not qualify for passive index inclusion, just as funds and ETFs are not eligible as index constituents.
The October 10th flashpoint
If we follow the timeline, the sequence of events around October 10th looks like this:
1. Macro shock: On October 10th, Trump announced 100% tariffs on all Chinese imports, along with new export controls on critical software. Global risk assets plunged, and tech stocks suffered their biggest one-day loss since April.
2. Crypto liquidation cascade: Crypto, already heavily levered, took the hit next. BTC and ETH sold off sharply, and more than $19 billion in leveraged crypto positions were liquidated over 24 to 48 hours, marking the largest wipeout the market has ever seen. In the process, total crypto market capitalization shed hundreds of billions of dollars almost overnight.
3. Quiet structural bombshell: On the very same day, MSCI quietly released its DAT consultation. The tariffs and leverage explain the violence of the initial crash; the MSCI document helps explain why the market has struggled to mount a meaningful bounce since.
Why MSCI’s move hits the heart of this cycle
DATs are not just “another crypto narrative stock” — they are a bridge between TradFi capital and digital assets. Passive funds, pension money, and “index-only” allocators often can’t easily buy bitcoin and other cryptocurrencies directly, but they can own an index that, in turn, holds a large DAT. That DAT can then leverage its equity value, via new share issuance or debt, to buy
more bitcoin, effectively turning traditional equity capital into incremental BTC demand.
If MSCI excludes DATs from indices, this can lead to the following key impacts for capital and crypto markets:
1. Forced selling: billions of dollars in passive money must dump these stocks around the February 2026 rebalance.
2. No new passive inflows: DATs lose a major reason to exist as the ability to ride index inclusion to ever-larger scale deteriorates.
3. Weaker structural bid for BTC: with DATs constrained, one of the key levered buyers of underlying bitcoin is impaired.
Smart money in the markets must have seen this coming, and the post-October 10th event market sentiment and behavior has changed accordingly: every dip is now evaluated against a known future overhang. Why go max-long into an asset where one of your biggest marginal buyer groups might be forced to sell in a few months?
While this may not have caused the original tumble, it absolutely changed the appetite in the market to buy the dip.
Why the market can’t find a meaningful bounce
Since the crash, three forces have lined up to keep the market under pressure.
First, the obvious one: macro headwinds. Rising rate fears, renewed trade-war risk, and broader risk-off tone have kept TradFi allocators cautious and reluctant to add risk. Second, buyers are exhausted. Retail investors were badly burned in the October liquidation and have been slow to step back in, while ETF flows have cooled, with multiple weeks of outflows replacing the relentless inflows that defined the earlier phase of the cycle. Third, DAT uncertainty is running
high. Almost every analyst report now flags MSCI’s January 15th decision as a pivotal risk for bitcoin and other digital-asset treasury stocks, and the prospect of $2.8 to $8.8 billion in potential passive outflows hangs over the sector like a cloud.
So we have a market where sellers are motivated, hedging, de-risking, and locking in tax losses; while new structural buyers are hesitant, waiting for clarity on indices, tariffs, and Fed policy; and the old structural buyers, the DATs, are under threat. The result is a market that produces sharp intraday pops followed by a wall of supply, with no sustained trend higher.
Two possible paths may emerge
The story now converges on January 15, 2026, MSCI’s decision day, and from here two broad paths emerge.
In a negative outcome, DATs are classified as “funds” and excluded from major indexes, prompting pre-positioning dumps into the February review window as active managers and arbitrageurs front-run passive flows, forced selling of DAT stocks as index trackers rebalance, and a likely hit to bitcoin and wider digital-asset sentiment as one of their key TradFi on-ramps is structurally weakened.
Although this may not automatically trigger a multi-year bear market, it
could remove some of the easiest levers to support digital-asset prices via listed equity structures, leaving a more fragile, spot- and derivatives-driven market in the short term.
In a positive or softer outcome, MSCI could decide not to exclude DATs or adopt a more nuanced framework that keeps them in core benchmarks. In that scenario, the overhang disappears, DATs regain their role as scalable vehicles for BTC exposure, and the narrative can shift from “index exile” back to “index-driven adoption”; combined with any improvement in macro conditions or ETF flows, that setup could fuel a powerful relief rally.
Either way, MSCI has turned what used to be a niche micro-structure issue into a macro event for the entire crypto complex.
What should crypto investors take from this
For crypto investors, a few lessons stand out. The October 10th crash was not just a “crypto thing”; it was part of a broader macro shock triggered by tariff headlines and then amplified by leverage. On the very same day, MSCI quietly altered the structural equation for one of crypto’s biggest buyer cohorts, and while that shift doesn’t show up in on-chain charts, it matters enormously for capital flows.
From now until mid-January, every dip and every rally in DAT stocks and in BTC itself will play out under the shadow of MSCI’s decision. Above all, crypto does not live in a vacuum: index rules, tariff policy and ETF flows, those supposedly boring TradFi details, can suddenly become the main plot.
The bottom line and the future of DATs and DACs
The October 10th crash was the moment the market realised two things at once: first, that macro events can still nuke crypto and that tariffs and policy shocks really do matter; and second, that the current market structure is more fragile than many assumed, because if the index system turns against DATs, one of the core engines of this cycle stalls, which explains why we haven’t seen a clean V-shaped recovery. The liquidation event is over; the structural question is not.
If MSCI’s January decision is negative, expect more turbulence as the market prices in forced selling and a weaker DAT flywheel. If it’s positive, the overhang lifts and the bull narrative most likely will get a fresh shot of adrenaline.
However, even in the worst case, this wouldn’t kill the DAT model. It would simply reorder the incentives and create a new category of DAT. Instead of chasing index inclusion and balance-sheet scale through leverage and financial engineering, DATs would need to focus on generating real, incremental value for the underlying asset ecosystem, and on capturing a share of that value for their shareholders. Listed vehicles could use their access to public capital to
build products and services that solve genuine problems, put the digital assets they hold to work, and support broader ecosystem growth. A loose historical analogue is the way Consensys operated around Ethereum in its early days. Under this approach, the narrative evolves from Digital Asset Treasuries to Digital Asset Companies (DACs).
Either way, October 10th wasn’t a random crash. It was the day the market discovered that the “number go up” machine itself might be under review, and a signal that some fundamental shifts are coming in how the crypto industry operates and converges with TradFi.