What is happening when index funds are removing companies that hold Bitcoin?

In October, the US financial services giant MSCI began consulting on the issue of “companies holding digital assets.” This discussion was sparked when different approaches to gaining exposure to Bitcoin started to diverge clearly.

By mid-2025, there are three main channels channeling institutional funds into BTC: spot Bitcoin ETF funds with assets under management exceeding $100 billion, marquee mining companies with integrated Bitcoin operations, and a new group of public companies with crypto treasuries as their primary business activity. MSCI focuses on the third group, raising the question of whether these companies are truly operating businesses or just funds wrapped in corporate shells.

MSCI’s new rules create instability

MSCI’s proposal is very clear: remove from the Global Investable Market Index any company with digital assets exceeding 50% of total assets. MSCI also seeks market feedback on whether companies that self-identify as “digital asset treasuries” or primarily raise capital to accumulate Bitcoin should be treated similarly.

The schedule for this change is set: consultation ends on December 31, final decision is expected by January 15, and implementation will occur during the February 2026 index review.

JPMorgan simulates the impact of removal

JPMorgan analysts responded by analyzing the entire scenario. As of November, the market cap of Strategy (MSTR) was around $59 billion, with about $9 billion held by passive funds tracking major indices.

If only MSCI proceeds with the removal plan, approximately $2.8 billion in passive assets would be forced to sell. However, if Russell and other index providers follow suit, the total mechanical fund flow could reach $8.8-9 billion, according to Barron’s calculations.

This concern is not unfounded — it would be the second index shock Strategy has faced after being removed from the S&P 500 earlier, and the market reacted very strongly. JPMorgan was publicly criticized for allegedly trading on insider information, sparking calls for a boycott (boycott) of the bank and short-selling their stocks.

Deeper tensions: Bitcoin beta enters traditional portfolios

Behind this debate lies a larger structural issue. According to a consulting report by DLA Piper from October, the digital asset treasury sector has exploded. Over 200 US public companies adopted this strategy by September 2025, holding about $115 billion in cryptocurrencies with a total stock market cap of around $150 billion — up from $40 billion a year earlier.

Among them, about 190 companies focus on Bitcoin, while 10-20 hold other tokens. With Bitcoin currently at $92.16K and accounting for 55.98% of the total crypto market cap, the choice is clearly justified.

For institutions restricted by regulations prohibiting direct crypto holdings, these stocks offer a convenient alternative: tracking BTC through equity exposure without violating compliance restrictions. But that convenience comes at a cost.

Structural gaps in the treasury model

Many newer treasuries have financed Bitcoin purchases through convertible bonds and private placements. When their stock prices fall below the Bitcoin holdings’ value, boards face pressure to sell coins and buy back shares — a tricky situation.

Digital asset treasuries invested about $42.7 billion in cryptocurrencies in 2025, with $22.6 billion in Q3 alone. This also faces its own difficulties.

Considering Solana, with a current price of $143.01 and a market cap of $80.74 billion, SOL-focused treasuries have seen their net asset value drop from $3.5 billion to $2.1 billion — a 40% decline. This could trigger forced liquidations of around $4.3-6.4 billion if a small part of their positions are closed.

Bitcoin ETFs take the lead

At the same time, Bitcoin spot ETFs surpassed $100 billion in assets under management in less than a year since launch. BlackRock’s IBIT alone holds over $100 billion in Bitcoin, representing about 6.8% of the circulating supply by the end of 2025.

These products offer a more pure Bitcoin exposure without the issues of leveraged balance sheets or NAV discounts like treasury stocks. Ethereum is also tracked, with a current price of $3.16K and a market cap of $381.56 billion, although the focus remains primarily on Bitcoin.

MSCI’s consultation is accelerating a capital rotation already underway: BTC exposure shifting from treasury stocks (forced sellers when valuations collapse) to managed ETFs.

Broader implications

For Bitcoin, this rotation could be neutral or even positive if ETF inflows offset treasury sales. But for stocks, it is clearly negative liquidity-wise. For BTC dominance, these changes could also reinforce Bitcoin’s structural advantage: products that organizations shift to are almost entirely BTC.

However, some treasuries have experimented with Solana, Ethereum, and other tokens, showing not all of these stocks are one-way.

Meanwhile, Russell and FTSE Russell have not yet officially started consulting on digital asset treasuries, but JPMorgan’s $8.8-9 billion scenario assumes major providers will gradually follow MSCI’s approach over time.

The real key: Who will own Bitcoin?

MSCI’s move forces organizations to decide: should Bitcoin be included in stock indices or in dedicated crypto products? This consultation is methodological, but its consequences are structural — it determines whether BTC beta resides in ETFs and large corporate treasuries, or in a decentralized ecosystem of smaller holders who will become forced sellers when the market turns.

The answer not only reshapes indices but also influences the future concentration of Bitcoin ownership.