If MSCI bans "more than half of DAT's market cap companies," will it trigger over $10 billion in sell-offs?

Morgan Stanley’s MSCI index plans to exclude companies with high “coin holdings,” potentially triggering $15 billion in passive fund selling pressure?
(Background: Reader Letter > Why does MSCI have to act? Strategy is shaking the index system)
(Additional context: MicroStrategy requests MSCI to withdraw the “exclude MSTR” proposal: the 50% coin holding threshold is baseless, which is stifling American innovation!)

Less than a month before the January 15, 2026 “judgment day,” MSCI, the index leader, plans to reclassify companies with “digital asset proportions over half” on their balance sheets and remove them from the global investable market index. On the surface, it’s a classification adjustment, but in reality, it could trigger over $10 billion in forced selling by passive funds, becoming the first crypto shockwave in the 2026 crypto market.

What are MSCI’s new proposed regulations?

The draft labels crypto reserve companies as “Digital Asset Treasuries” (DATs), citing that their “price volatility characteristics are now similar to Bitcoin ETFs.” Once officially implemented next year, these companies will no longer qualify as “industrial companies” and must be removed from the MSCI Global Investable Market Index.

Recently, the opposition organization “BitcoinForCorporations” reported that there are 39 affected companies with a total market cap of $113 billion. If MSCI proceeds with cutting these DATs, passive funds will need to adjust their positions by $10 to $15 billion. For the crypto sector, which has already declined for three consecutive months, this liquidity drain could become the trigger that breaks leverage.

Mechanical selling pressure from passive funds

Passive funds track indices with the goal of minimizing tracking error. When an index removes a component, the fund must sell. This is not driven by panic; if MSCI finalizes the decision, the market will see a cycle of “price drops → net asset value deviation → passive selling → further price declines.”

Within the $113 billion market cap, Strategy accounts for as much as 74.5%, almost determining the overall impact. JPMorgan estimates that losing index membership could cause passive funds to sell $2.8 billion worth of stocks, enough to impact MSTR’s stock price and financing capacity.

If the stock price is pressured downward, the company’s balance sheet will also contract, possibly leading to asset sales of Bitcoin to maintain liquidity. Falling prices will further drag down the stock, creating a typical “double kill” spiral of stock and crypto prices in a self-reinforcing cycle.