DAT company included in Russell Index cannot save Ethereum either
- Core Insight: The inclusion of multiple cryptocurrency-related stocks in the Russell 3000 Index will bring passive fund allocations for these companies, driving up their stock prices. However, capital flows into the corporate level, not directly benefiting underlying crypto assets like ETH, revealing the structural dilemma of "token value capture."
- Key Elements:
- FTSE Russell announced the preliminary 2026 inclusion list, adding several crypto-concept stocks such as CoreWeave and Galaxy Digital. If confirmed, approximately $10.6 trillion in passive funds tracking the index will be forced to buy these stocks.
- Historical data shows that newly included stocks in the Russell 2000 Index typically experience a short-term gain of 5%-10% after the adjustment. The impact is more significant for low-liquidity crypto stocks, helping them issue more shares to buy additional cryptocurrencies.
- Ethereum community thought leader David Hoffman liquidated his ETH position, pointing out that Ethereum, as a non-profit organization, has an open-source characteristic of "no transaction fees," which contradicts the value appreciation logic of the ETH token. Most value is captured by the application layer and L2s.
- Using BitMine as an example: Within 9 months of ETH's price dropping from $5,000 to $2,000 (a decline of nearly 60%), it purchased between 3.6 million and 3.7 million ETH but still could not halt the price decline. This indicates that public chain tokens face a valuation ceiling.
- The article concludes that crypto-concept stocks benefit from traditional financial rules, but underlying assets face a narrative shift toward "ETH as public infrastructure." How to introduce new value narratives for the token remains the core challenge.
Original Author: Eric, Foresight News
This week, FTSE Russell announced the preliminary membership list for the 2026 Russell 3000 Index. The latest index component reshuffle added several cryptocurrency-concept stocks, with CoreWeave (CRWV), Iren Limited (IREN), and Galaxy Digital Holdings (GLXY) all appearing on the list of new additions.
Additionally, Ethereum DAT companies BitMine (BMNR) and Sharplink (SBET), as well as SOL DAT company Forward Industries (FWDI), were also included. Barring any surprises before June 29th, hundreds of billions of dollars in passive funds tracking the Russell indices will be forced to allocate to these targets come June, regardless of individual fund managers' personal views on cryptocurrency.
This is undoubtedly good news for investors in crypto-concept stocks, but it's hard to say the same for cryptocurrency itself.
What is the Russell Index?
The Russell index family, managed by FTSE Russell, a subsidiary of the London Stock Exchange Group, is one of the most influential benchmarks for US equities globally. The Russell 3000 Index covers the 3,000 largest companies by market capitalization in the US stock market, representing approximately 98% of the investable US equity market. Two core sub-indices derived from it, the Russell 1000 (large-cap, the top 1,000 companies) and the Russell 2000 (small-cap, the subsequent 2,000 companies), are also vital components of the capital markets.
Every June, FTSE Russell conducts a comprehensive reconstitution based on market capitalization data from the end of April. Starting in 2026, this frequency will increase to semi-annual (June and November) to reflect market changes more quickly.
As of 2026, approximately $20 trillion in assets are benchmarked to FTSE Russell indices, with the Russell US index family alone carrying about $10.6 trillion of that. This means any company entering a Russell index immediately becomes a target for massive passive capital allocation.
Funds tracking the Russell indices primarily come from two product types: ETFs and index funds. Taking the Russell 2000 as an example, the largest tracking vehicle is BlackRock's iShares Russell 2000 ETF (IWM), with about $75 billion in assets under management and daily trading volume exceeding 26 million shares, making it one of the most liquid small-cap ETFs globally. The next is the Vanguard Russell 2000 ETF (VTWO), managing approximately $13.6 billion in assets with a low expense ratio of 0.07%, a top choice for long-term passive investors. Other institutional products include the Vanguard Russell 2000 Index mutual fund (VRTIX) and BlackRock's Russell 2000 Index fund.
These funds employ a "passive management" approach: their sole objective is to replicate the index's performance as accurately as possible, not to actively select stocks. Consequently, when a stock is added to the index, these funds must buy it according to its weight after the change takes effect; conversely, stocks removed are forcibly sold. This mechanism makes the Russell index reconstitution day (typically the last Friday of June) one of the highest-volume trading days in the US stock market. In 2024, the closing volume on reconstitution day reached a record of nearly $220 billion.
Historical data shows that companies added to the Russell index often experience significant price volatility around the reconstitution. According to multiple studies, newly added Russell 2000 companies typically see an average short-term price increase of 5%-10% following the effective date, driven purely by forced buying from passive funds. This effect may be more pronounced for smaller-cap, lower-liquidity crypto-concept stocks like BitMine.
For DAT companies, the stock price increase triggered by passive buying makes it easier to issue additional shares to purchase more cryptocurrency. If final inclusion in the Russell Index is confirmed, the "flywheel" effect, which previously relied on market hype, can now be powered by the leverage of passive funds.
DAT Company Stocks Benefit, ETH Itself May Not
Just days before the Russell index list announcement, Bankless co-founder David Hoffman, one of the most influential voices in the Ethereum community, liquidated his entire ETH position.
Hoffman's explanation was not based on a bearish view of the Ethereum network itself. On the contrary, he stated he is "extremely bullish on the future of the Ethereum network," but the problem lies with the core narrative that "ETH is money." In Hoffman's view, Ethereum is fundamentally a "giver, not a taker." It provides the world's most secure blockspace at cost, tokenizes global assets at cost, and secures billions of dollars in DeFi protocols at cost. "Charging no fees for any transaction" is the nature of open-source software and the source of Ethereum's power, but it paradoxically contradicts the logic of "token value appreciation."
Hoffman stated plainly that Ethereum is the most successful non-profit organization in human history, but architecturally, Ethereum does not prioritize ETH. This is not a flaw but a feature. He believes that only a small portion of the success of Ethereum's network and its ecosystem will be reflected in ETH's price. The application layer and L2 services are capturing most of the value. The rollup-centric roadmap means L2s capture 97% of the profits, while ETH receives a minimal share.
This reveals a structural dilemma. DAT company stock prices can gain independent valuation boosts by leveraging the rules of the traditional financial system (index inclusion, institutional allocation, stock premiums), potentially even trading at a premium relative to their underlying crypto assets. However, when these companies raise capital in the secondary market, those funds do not flow directly to ETH itself.
Given the relatively low market capitalization of DAT companies, even passive allocation inflows will likely be modest, and the potential for stock price increases is limited. Furthermore, both Ethereum and Solana are currently facing challenges in their token prices. Buying pressure from DAT companies might offset some selling pressure but cannot solve the fundamental issue of the market failing to assign higher valuations to public blockchains.
In August 2025, Ethereum hit a new all-time high near $5,000, but currently, Ethereum's price hovers around $2,000. Over the nine-month period during which the price dropped nearly 60%, BitMine alone purchased 3.6 to 3.7 million ETH, yet this failed to halt the unrelenting downtrend.
Conclusion
The Russell Index opening its doors to cryptocurrency companies is undoubtedly another milestone in the convergence of traditional finance and the digital asset world. For companies like CoreWeave, Iren, and Galaxy, this means broader institutional recognition, more stable capital inflows, and higher market liquidity. But when DAT companies face similar capital inflows, the benefits may not trickle down to the underlying crypto assets.
Currently, the narrative "ETH is money" is giving way to the reality that "ETH is public infrastructure." This holds true for Solana and a host of other public blockchains as well. While rising on-chain revenue and the prospect of buybacks might support token prices in the short term, this logic has an invisible ceiling. Introducing a new narrative for token value may be the most pressing issue to consider now.
