S&P Dow Jones Indices has chosen not to add Strategy (formerly MicroStrategy) to the S&P 500, even though it meets the size and eligibility criteria. This decision highlights concerns about the risks associated with corporate crypto-treasury models. Most of Strategy’s value comes from its bitcoin holdings instead of its core IT operations.

Index Providers and Crypto-Centric Companies

Other index providers might rethink including crypto-focused companies because of this choice. Nasdaq has introduced a requirement for shareholder approval for companies that want to buy cryptocurrency with new shares. This may shift investments toward crypto firms that have functional operations, like exchanges and miners. The volatility of crypto investments is clear. Companies such as EightCo, CaliberCos, and Mogu have seen quick price changes due to crypto acquisitions, although many have since lost value. In Strategy’s case, the premium above its bitcoin assets has decreased significantly. The S&P’s rejection of Strategy sends a strong message against corporate crypto treasury models. This could put immediate pressure on companies seen mainly as bitcoin holding entities. Recently, implied volatility for Strategy’s near-term options spiked from about 85% to over 120%, indicating that traders expect sharp price movements. This rejection speeds up the reduction of Strategy’s premium over its bitcoin holdings, a trend we noticed throughout 2025. Historical data from the 2024 bull market shows that similar premiums on crypto-proxy stocks faded as more direct investment options, like spot ETFs, gained popularity. A potential strategy is to bet against these proxy stocks while investing in bitcoin futures or spot ETFs to profit from the shrinking premium.

Rotation of Capital in the Crypto Sector

We expect a clear movement of capital from companies using balance-sheet crypto to firms with actual operational businesses in the sector. Crypto exchanges and established mining operations now seem like a better way to gain equity market exposure. For instance, after the S&P news, stocks of major exchanges remained relatively steady, while Strategy’s stock dropped over 18%. The Nasdaq’s recent requirement for shareholder approval for crypto purchases was an early warning sign. The S&P’s decision reinforces a more cautious environment for corporate crypto adoption. We can anticipate other index providers will likely follow suit, creating a “glass ceiling” for companies that depend heavily on digital assets. This change is already showing in fund flows. In the last two weeks, several popular tech funds with a significant focus on crypto-proxy companies reported net outflows. This suggests a broader effort to reduce risk, which could slow down momentum across the entire sub-sector in the near future. Therefore, traders should consider hedging long positions in similar companies or using options to manage their risk. Create your live VT Markets account and start trading now.

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