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> they will sell large amounts of equities ... and they will buy large amounts of cryptocurrency

More likely they will buy new crypto focused companies (Coinbase IPO) or that existing firms will adopt crypto based business lines. The investment is firms innovating, rather than the value of the underlying instruments or technology they use.

That's entirely possible too, but the problem (for index fund shareholders) is identical if the securities involved are "private preferred stock" rather than "tokens on the Ethereum blockchain". They're still growth opportunities outside the indexed universe that siphon from value opportunities inside the indexed universe, which the index fund can only legally purchase once much of the growth has already occurred.

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