Why The Market Crashed On October 10, And Why It’s Struggling to Bounce

The severe crypto market crash on October 10th, marked by massive liquidations, was initially blamed on macro factors like Trump's 100% China tariffs. However, the article argues that the persistent weakness since then is due to a quiet structural bombshell dropped the same day by MSCI: a consultation proposing to reclassify Digital Asset Treasury companies (DATs)—publicly-traded firms holding significant digital assets—as fund-like vehicles, potentially excluding them from major equity indexes if digital assets exceed 50% of total assets.

DATs have been a crucial structural buyer, benefiting from a flywheel effect where index inclusion drives passive fund buying, increasing market cap, enabling more capital raising, and leading to more digital asset purchases. MSCI's potential exclusion, with a final decision expected January 15, 2026, threatens forced selling of billions in stock by passive funds and removes a major source of incremental demand for underlying assets like Bitcoin. This uncertainty acts as a significant overhang, explaining the market's failure to mount a sustained bounce amid cautious macro sentiment and exhausted retail buyers.

The path forward hinges on MSCI's decision. A negative outcome would trigger forced selling and weaken the structural bid for crypto, while a positive outcome could fuel a strong rally. Regardless, MSCI has elevated a micro-structure issue into a macro event, signaling that the convergence of crypto and traditional finance (TradFi) is facing fundamental structural reviews, potentially forcing DATs to evolve into Digital Asset Companies (DACs) focused on generating real ecosystem value rather than relying solely on index inclusion.

(Source：CoinDesk)