Did Morgan Stanley Orchestrate Bitcoin October Crash? Analysts Draw Correlations

Bitcoin’s price dropped nearly $18,000 on October 10, 2025, following a decision by MSCI to propose removing Digital Asset Treasury Companies from its global indexes. The move targeted firms like MicroStrategy and Metaplanet, which hold substantial Bitcoin reserves. MSCI indexes guide trillions in passive investment flows.

The announcement created uncertainty in the market. Institutional investors, including pension funds and ETFs, faced potential forced selling pressure. Bitcoin fell approximately 31% over the next three months, marking one of the worst quarters for crypto since 2018.

On January 1, 2026, Bitcoin began a sharp reversal, rising 8% in five days. This followed a 24-hour period in which Morgan Stanley filed for Bitcoin, Ethereum, and Solana ETFs and MSCI reversed its decision not to remove crypto companies from its indexes.

Why Did This Happen?

MSCI’s October 10 decision is widely seen as a catalyst for Bitcoin’s sharp price drop. Analysts from Bull Theory suggest the move created a sell-off by introducing forced selling pressure for index-linked funds and passive investors.

Morgan Stanley filed for spot Bitcoin, Ethereum, and Solana ETFs on January 6, 2026. This move was followed by MSCI’s reversal, eliminating the threat to crypto-heavy firms. The sequence has led to speculation about a coordinated effort to suppress prices before launching ETFs.

The three-month uncertainty window created by the MSCI consultation period froze investor demand. This period coincided with Bitcoin's steepest decline since 2018, with altcoins falling even further.

How Did Markets React?

Bitcoin’s January recovery surprised many market participants. The cryptocurrency rose from $87,500 to $94,800 in five days. Analysts have noted the possibility of insider knowledge or strategic timing behind this reversal.

Morgan Stanley’s Bitcoin Trust, if approved, will hold Bitcoin directly and trade on a U.S. exchange. The ETF structure will allow retail investors to buy and sell shares through brokerage accounts.

The broader ETF market for cryptocurrencies has grown significantly. As of January 2026, U.S. spot Bitcoin ETFs had $123 billion in total net assets.

What Are Analysts Watching Next?

Bull Theory analysts suggest that the same market participants who potentially orchestrated the October crash may now benefit from the January rebound. This raises concerns about market manipulation and the role of institutional players in shaping Bitcoin’s price.

Morgan Stanley’s Bitcoin ETF filing comes amid growing institutional confidence in regulated crypto products. The firm's entry into the crypto ETF market is expected to deepen the industry's institutional footprint.

MSCI’s decision to maintain its index structure has eased some market uncertainty. However, the sequence of events has left many questioning whether the October crash was an unintended consequence or a calculated market move.

The U.S. Securities and Exchange Commission approved spot Bitcoin ETFs in January 2024. This decision marked a turning point for institutional capital and mainstream investor access to Bitcoin.

Bitcoin’s recent price movements, combined with institutional ETF activity, highlight the growing importance of regulated crypto investment vehicles. Analysts are now closely watching whether the January rebound is sustainable or if further volatility lies ahead.