Insights 
VT 
S&P Dow Jones Indices has decided not to include Strategy (formerly MicroStrategy) in the S&P 500, despite it fulfilling the size and eligibility requirements. This decision underscores concerns about the risks involved with corporate crypto-treasury models, as most of Strategy’s valuation stems from bitcoin holdings rather than its primary IT operations.
Index Providers and Crypto Centric Companies
Other index providers may reconsider the inclusion of crypto-centric companies following this decision, while Nasdaq now mandates shareholder approval for firms issuing shares to acquire cryptocurrency. The move might influence investment focus towards crypto entities with functional operations like exchanges and miners.
The volatility linked to crypto investments is evident, with companies like EightCo, CaliberCos, and Mogu experiencing swift stock price changes due to crypto acquisitions, although several have since depreciated. In Strategy’s case, the premium over its underlying bitcoin assets has also diminished considerably.
The S&P’s decision to reject Strategy’s inclusion is a significant institutional signal against corporate crypto treasury models. We see this creating immediate downward pressure on companies that are viewed primarily as bitcoin holding vehicles. Implied volatility on near-term options for Strategy has already jumped from around 85% to over 120% in the past week, suggesting traders are bracing for sharp moves.
This rejection accelerates the compression of Strategy’s premium over its underlying bitcoin holdings, a trend we’ve observed throughout 2025. Looking back at historical data from the 2024 bull market, similar premiums on crypto-proxy stocks eventually eroded as more direct investment vehicles, like spot ETFs, gained liquidity. A potential trade is to short these proxy stocks while going long on bitcoin futures or spot ETFs to capitalize on the shrinking premium.
Rotation Of Capital In The Crypto Sector
We anticipate a clear rotation of capital away from balance-sheet crypto plays and toward companies with genuine operational businesses in the sector. Crypto exchanges and established mining operations now appear to be a more favorable way to gain exposure within equity markets. For instance, in the days following the S&P news, stocks of major exchanges have remained relatively flat, while Strategy’s stock has fallen over 18%.
The Nasdaq’s rule change requiring shareholder approval for crypto purchases, which we saw phased in earlier this year, was the first warning. The S&P’s move now solidifies this new, more cautious environment for corporate crypto adoption. We should assume other index providers will adopt similar stances, creating a “glass ceiling” for the valuations of companies that heavily rely on digital assets.
This shift is already visible in fund flows, with data from the last two weeks showing net outflows from several popular tech funds that have high concentrations in crypto-proxy companies. This suggests a broader de-risking is underway, which could dampen momentum for the entire sub-sector in the near term. Therefore, traders should consider hedging any long positions in similar companies or using options to define risk.
