Equities Follow In Crypto’s Footsteps: Risk assets took it on the chin last week, with technology and AI-related stocks bearing the brunt of the damage. The S&P 500 dropped roughly 1.62%, while the NASDAQ 100 fell about 2.63%. The catalyst? There is growing concern that AI stocks have gotten ahead of themselves, driven by fears that the hype has outpaced the fundamentals. Interestingly, NVIDIA, the world's most valuable company and the market's clearest proxy for AI momentum, actually beat expectations when it reported third-quarter results last week. The good news was apparently not enough to calm nerves.
This equity weakness inevitably spilled into crypto, given how closely digital assets track technology stocks. Bitcoin sank as low as $80,530 on Friday, with Ethereum touching $2,615, extending what had already been a rough stretch for the crypto market. The weekend brought a reprieve, with crypto clawing back a decent chunk of those losses.
Are Crypto Treasury Firms at Risk of Index Removal? Back in October, the major index provider MSCI announced that it was seeking feedback on whether to exclude digital-asset treasury companies from its indexes. The rationale: firms like Strategy—whose balance sheets are dominated by Bitcoin—behave more like investment funds than operating companies. The proposed threshold would affect any firm with digital assets comprising more than 50% of its balance sheet.
MSCI's consultation period runs through December 31, with findings due January 15 and any changes taking effect in February. Strategy's founder and Executive Chairman Michael Saylor took to X last week to make the case for his company's continued index inclusion.
The stakes are significant. Index inclusion drives substantial passive capital flows into these stocks. For Strategy alone, removal from MSCI indexes could trigger an estimated $2.8 billion in outflows, according to a JPMorgan estimate. On the flip side, there is speculation that Strategy could eventually land a spot in the S&P 500 index. The latter would have the opposite effect.
BlackRock Plans Staking For Its Ethereum ETF: BlackRock appears to be laying the groundwork for staking the Ether held in its U.S. Ethereum ETF. Last week, the firm registered an "iShares Staked Ethereum Trust ETF" in Delaware. This is not a formal filing with the U.S. Securities and Exchange Commission (SEC), the federal agency that regulates financial markets, but it does signal that BlackRock is serious about pursuing staking approval.
Why does this matter? If the SEC eventually signs off, BlackRock's Ethereum ETF would become meaningfully more attractive to investors. Staking generates yield on the underlying Ether, giving holders an additional return on top of any potential price appreciation.
