In what could soon be recognized as the worst-performing week since November 2022, the market’s leading crypto, Bitcoin (BTC), experienced a significant downturn on Friday, plummeting to an eight-month low of $80,000.
Market analysts suggest that this downturn began in earnest on October 10, when the market first exhibited signs of a downward trajectory. That day was marked by a brutal liquidation event, erasing nearly $21 billion within minutes and triggering a series of flash crashes that have since perpetuated fears throughout the industry.
Ran Neuner, the founder of Crypto Banter, believes he has uncovered the reasons behind the crash that commenced on October 10 and why the market has struggled to regain its footing since then.
According to Neuner, two primary players known as Digital Asset Treasuries (DATs), including firms like Strategy (MSTR) and others, have been significant buyers driving this market cycle. The objective for these firms is straightforward: to become large enough to gain entry into major indices.
Once included, passive index trackers are compelled to purchase large quantities of their stocks, thereby enabling these companies to grow even larger and secure placements in additional indices, thus perpetuating a self-reinforcing cycle.
On October 10, MSCI, the world’s second-largest index company, announced a critical evaluation. They are questioning whether companies that primarily hold crypto assets should be classified as either “companies” or “funds.” If these firms are categorized as funds, they would no longer qualify for inclusion in passive indexing.
This is crucial because funds follow a cyclical pattern: they acquire assets, grow larger, and become eligible for additional indices, further boosting their asset base. A ruling on this matter is anticipated on January 15, 2026.
Should it favor the classification of these companies as funds, Neuner asserts that firms like Strategy could face automatic removal from all indices. Such a decision would compel pension funds and other passive index holders to divest from these companies, effectively diminishing one of their primary reasons for existence.
Given that DATs have underpinned the current market cycle through substantial purchasing pressure, investors apparently recognized the implications of the October 10 announcement right away and adjusted their positions accordingly.
This pivotal date now appears anything but coincidental; it marked a realization among informed market participants regarding significant risks to both cryptocurrencies and the existing market structure.
Looking ahead, the expert predicts that the market could continue to decline until the end of December. If the forthcoming announcement from MSCI is unfavorable, Neuner believes that a substantial sell-off may ensue as investors prepare for the potential exclusion from indices.
Conversely, if the ruling is positive, Neuner asserts that it could signal a renewed bull market for Bitcoin and the broader crypto market.
As of this writing, Bitcoin has slightly recovered to $84,880. However, the market’s leading cryptocurrency is trading 32% below its all-time high of $126,000, which was reached at the beginning of October—just four days before the major crash.
Featured image from DALL-E, chart from TradingView.com
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