Bitcoin Experiences Major Drop, Reaching Eight-Month Low
Bitcoin (BTC), the leading cryptocurrency, has seen a notable decline, hitting an eight-month low of $80,000, marking what may soon be recognized as the poorest performing week since November 2022.
Market analysts indicate that the downturn kicked off on October 10, when signs of a downward trend first emerged. This day was marked by a sudden liquidation event, which led to nearly $21 billion disappearing in a matter of minutes, triggering flash crashes that spread fear across the industry.
Ran Neuner, founder of Crypto Banter, believes he has identified the factors behind the crash that started on October 10 and why the market has been struggling to bounce back since then.
According to Neuner, two significant players known as digital asset treasuries (DATs), including companies like Strategy (MSTR), have been crucial buyers fueling the current market cycle. Their aim? To grow large enough to get included in major indexes.
Once they achieve that, passive index trackers are compelled to buy considerable amounts of their stock, enabling these companies to expand further and secure additional index placements, which creates a self-reinforcing cycle.
On October 10, MSCI, the second largest index company globally, issued a crucial assessment questioning the classification of companies primarily holding crypto assets as either “companies” or “funds.” If they’re deemed funds, they’d become ineligible for inclusion in passive indexes.
This classification holds a lot of weight because it follows a cyclical pattern. Funds acquire assets, grow, become eligible for more indexes, and expand even more. A decision on this matter is expected to be made by January 15, 2026.
Neuner argues that if these companies are classified as funds, firms like Strategy could be removed from all indexes. This would essentially force pension funds and other passive holders to divest these companies, stripping them of one of their main lifelines.
Future of Cryptocurrencies at Stake
Since DAT has driven much of the current market through substantial buying, it appears that investors quickly grasped the implications of the October 10 announcement and adjusted their strategies.
October 10 now appears to be no coincidence; informed market players have recognized significant risks to cryptocurrencies and the overall market structure.
Experts forecast that the market may continue to decline through the end of December. If the upcoming MSCI updates are negative, Neuner warns of a substantial drop as investors prepare for potential index exits.
On the other hand, Neuner points out that a favorable ruling could spark a new bull market for Bitcoin and the wider crypto landscape.
At the time of writing, Bitcoin has slightly rebounded to $84,880. Nevertheless, it remains 32% below its all-time high of $126,000, which was set just days before the crash in early October.
