Analysis: MSCI Temporarily Excludes the Strategy, but Implements a Freeze Mechanism to Reduce the Index Fund Buying Effect

**MSCI Holds Off on Removing Bitcoin Treasury Firms from Indices, Imposes Share Count Freeze** January 8 – Global stock and ETF benchmark provider MSCI announced it will not temporarily remove companies with Bitcoin treasuries from its indices, but has imposed a technical freeze on their share counts. MSCI explained: “MSCI will not increase the Number of Shares (NOS), Foreign Inclusion Factor (FIF), or Domestic Inclusion Factor (DIF) for these securities. Additionally, MSCI will delay the addition or reclassification of any securities on its preliminary list.” This decision effectively cuts the link between new share issuances and automatic purchases by passive index funds. The move eliminates the downside risk of forced selling spurred by passive fund outflows under the index framework—but it also erodes the upward momentum mechanism inherent to index trading. With MSCI’s freeze blocking automatic index fund buys, the strategy in question will need to turn to active investors to attract new capital going forward, challenging its reliance on a funding model that continuously grows its Bitcoin holdings.