Some people may not fully understand the significance of being included in an index. Let me simply explain it for beginners.
Foreign index funds have mandatory allocations. This means that they must buy corresponding stocks according to the index's weight, which is a requirement. Therefore, when MicroStrategy is included in an index, it means that there will be a lot of mandatory buying (regardless of price, it must be bought) in a short period, which will greatly support MicroStrategy's stock price in a short time. A typical example of this is Tesla being included in the S&P 500.
What is the relationship between MicroStrategy's stock price and Bitcoin? The relationship lies in the fact that when MicroStrategy borrows to buy Bitcoin, it is related to the stock price. There are two routes: one is to issue new shares to raise cash for purchases, and the other is to issue bonds to buy. The simplest explanation is that issuing new shares raises funds, and the higher the stock price, the easier it is to raise more money, which allows for more Bitcoin purchases. This is also related to the ability to convert bonds into shares during debt repayment, meaning bondholders can choose to convert their bonds into stock and sell them in the market without incurring losses, thus not needing to sell Bitcoin to repay the debt. Therefore, the higher MicroStrategy's stock price, the lower the risk of being forced to sell the Bitcoin it holds, leading to more money available to buy Bitcoin, creating a self-reinforcing cycle.
However, this matter was almost determined by major market players about a month ago.
