MSCI could trigger up to $15 billion in forced selling in the crypto market

The cryptocurrency market has been under constant pressure since October, a period which weighed heavily on overall sentiment. This fragile environment is likely to worsen if Morgan Stanley Capital International (MSCI) pursues its proposal to remove crypto cash companies from its benchmarks. Such a move would force funds tracking MSCI indexes to adjust their portfolios, leading to mandatory sales of these companies. Analysts estimate this could trigger up to $15 billion in cryptocurrency sales, intensifying market tension.

The potential impact of MSCI's proposal on the market

A coalition opposing MSCI's planned index changes, Bitcoin For Corporations, has warned that excluding crypto cash businesses could lead to significant outflows from the sector, projecting $10 billion to $15 billion in potential sales. Their assessment is based on a preliminary verified list of 39 companies, collectively holding an outstanding adjusted market capitalization of $113 billion.

Of this group, 18 are existing MSCI members slated for removal, representing $98 billion in outstanding adjusted value, while 21 non-members, with $15 billion in outstanding adjusted value, face permanent exclusion.

The group highlighted JPMorgan's analysis, which indicates that if Strategy were removed from MSCI indices, it could suffer outflows of approximately $2.8 billion. Strategy's total market cap is estimated at $50 billion to $56 billion, with about $9 billion held by passive funds tracking the index. The company alone accounts for nearly three-quarters (74.5%) of the total adjusted outstanding value on the preliminary list, or $84.1 billion out of $113 billion. Combined, potential outflows from all impacted companies could reach approximately $11.6 billion, highlighting the possibility of significant stress in the cryptocurrency market.

Industry leaders rally against proposal

Several prominent figures in the crypto industry have expressed support for a review by MSCI. Michael Saylor, executive chairman of Strategy, and Simon Gerovich, president of Metaplanet, are among those supporting Bitcoin For Corporations' petition, which has garnered 1,268 signatures, reflecting broad concern across the industry.

The group criticized MSCI's use of a threshold of 50% of total assetswhich could exclude companies solely because they hold Bitcoin or other digital assets. They argued that the proposed method misrepresents how these companies actually operate. Rather than being passive investment vehicles, they manage their operations completely, including staff and client management, while maintaining proper accounting. Viewing them as existing solely to hold digital assets creates a skewed picture of their business reality.

Market response to MSCI's proposed changes

In October, MSCI sought investor input on whether companies holding the majority of their assets in cryptocurrencies should remain in its benchmarks. Since these indices influence passive investment funds, their inclusion or removal can significantly affect a company's ability to attract financing. MSCI is expected to announce its final decision by January 15, with any approved changes planned for implementation during the February 2026 index review.

Many key industry players have expressed opposition to the proposal. Nasdaq-listed Strive has called on MSCI to let market forces decide whether companies holding Bitcoin should remain in passive investment portfolios, emphasizing that uniform treatment of all asset classes is essential to maintaining the credibility of a stock index. Strategy, the largest company holding Bitcoin on its balance sheet, also expressed objections, noting that the proposal could bias against cryptocurrency as an asset class and contradict MSCI's neutral role as a standards-setting organization.