Uncovering the Reason Behind the Market Crash on October 10 and Its Ongoing Struggles

The crypto market has been experiencing a downturn for weeks, with the biggest liquidation event in its history occurring on October 10. Despite attempts at recovery, every bounce has been short-lived. While factors such as U.S. President Donald Trump's 100% China tariffs, macroeconomic conditions, and over-leverage have been cited as reasons for the crash, they do not fully explain the market's persistent depression. A crucial factor that has been overlooked is a document published by MSCI, the world's second-largest index provider, on the same day as the crash. The document proposes reclassifying Digital Asset Treasury companies, which could lead to their exclusion from MSCI's main equity indexes. This change would have significant implications for the market, as it would remove a key source of demand for digital assets and potentially trigger forced selling by passive index funds. The exclusion of these companies from indexes would also limit their ability to raise capital and purchase additional digital assets, thereby reducing their market cap and index weight. As a result, the market is facing a major structural overhang, which is hindering its ability to recover. The consultation period for MSCI's proposal is open until December 31, 2025, with a final decision scheduled for January 15, 2026. The outcome of this decision will have a significant impact on the market, with two possible paths emerging. If MSCI excludes Digital Asset Treasury companies from its indexes, it could lead to forced selling, a reduction in passive inflows, and a weaker structural bid for BTC. On the other hand, if MSCI decides not to exclude these companies or adopts a more nuanced framework, it could lead to a relief rally. Ultimately, the market's ability to recover will depend on the outcome of MSCI's decision and the subsequent actions of investors and market participants.