The Nasdaq officially announced after Friday's market close that Bitcoin holder MicroStrategy has been confirmed to be included in the Nasdaq 100 Index on December 23.
Motivated by this, MicroStrategy (MSTR), a standout Bitcoin concept stock this year, rose 4.2% on Friday, with the stock price slightly increasing 0.54% after hours to $410.88, having nearly surged nearly five times this year, far exceeding Bitcoin's approximately 130% gain during the same period, with a current market capitalization of nearly $98 billion, successfully becoming a component of the Nasdaq 100 Index.
The Nasdaq 100 Index tracks the 100 largest non-financial companies listed on the Nasdaq Stock Exchange, including giants like Apple, Nvidia, Microsoft, Amazon, Meta, Tesla, and Costco. The index undergoes annual rebalancing based on market capitalization rankings on the last trading day of November each year.
MicroStrategy will welcome billions of dollars in passive investment.
CoinDesk senior analyst James Van Straten pointed out the importance of the milestone that "MicroStrategy will enter the Nasdaq 100 Index;" following the U.S. approval of the Bitcoin spot ETF, MicroStrategy's entry into the Nasdaq 100 Index could be the second-largest event of 2024.
Bernstein analyst Gautam Chhugani explained that Nasdaq's decision "will lead to MSTR being automatically included in some of the largest ETFs, such as Invesco's QQQ (the fifth largest ETF), triggering one-time new buying and ongoing participation in future fund inflows."
Bloomberg senior ETF analyst Eric Balchunas today estimated that MSTR will receive approximately 0.47% of the weight in the Nasdaq 100 Index, becoming the 48th largest component.
This weight corresponds to approximately $2.1 billion in MSTR being purchased through all ETFs tracking the index, with total assets under management for these ETFs around $451 billion.
We have not included separately managed accounts (SMA) or collective investment trusts (CIT) or any active strategies, so the final number may be a bit higher.
Is Bitcoin expected to benefit?
We know that MicroStrategy has purchased over 420,000 Bitcoins through extensive corporate bond issuance, and now with the inclusion in the Nasdaq 100 Index, it is expected to continue driving the company's stock price higher. This is beneficial for its future bond issuance, so it can be speculated that the company will continue to purchase Bitcoin for a longer period of time, potentially continuing to drive Bitcoin prices higher.
Next stop, the S&P 500 Index?
As MicroStrategy successfully leveraged its Bitcoin investment strategy to join the Nasdaq 100 Index, the market is focused on the possibility of MicroStrategy being included in the S&P 500 Index in 2025, although some analysts believe it remains challenging.
Gautam Chhugani pointed out, "Due to the profitability of MicroStrategy's software business, inclusion in the SP 500 Index may be challenging."
Eric Balchunas stated this week, "Due to the lack of profits, joining the S&P 500 Index will be more difficult, although changes in accounting rules surrounding Bitcoin valuation may make MicroStrategy eligible in 2025."
James Van Straten analyzed, "According to game theory, tracking the SP 500 Index SPDR S&P 500 Trust (SPY) is the largest ETF by size, with assets under management of about $650 billion, and it may need to include MSTR in order to compete with rivals."
If MicroStrategy successfully joins the SP 500 Index, it will see more significant capital inflow into MSTR, and "millions of mainstream investors will indirectly access Bitcoin, which will increase the flywheel effect of Bitcoin."
