The Nasdaq announced after the close on Friday that MicroStrategy, the dominant player in Bitcoin holdings among listed companies, will officially be included in the Nasdaq 100 Index on December 23.
Motivated by this, MicroStrategy (MSTR), which has performed well this year, rose 4.2% on Friday, with its stock price increasing 0.54% after hours to $410.88. So far this year, it has surged nearly 5 times, far exceeding Bitcoin's approximately 130% increase during the same period, with a current market capitalization of nearly $98 billion, successfully entering the components of the Nasdaq 100 Index.
The Nasdaq 100 Index tracks the 100 largest non-financial companies listed on the Nasdaq stock exchange, including giants such as Apple, Nvidia, Microsoft, Amazon, Meta, Tesla, and Costco. The index undergoes annual restructuring based on market capitalization rankings on the last trading day of November.
MicroStrategy will welcome billions of dollars in passive investments.
CoinDesk senior analyst James Van Straten pointed out the importance of 'MicroStrategy entering the Nasdaq 100 Index' as a milestone, and following the U.S. approval of Bitcoin spot ETFs, MicroStrategy's entry into the Nasdaq 100 Index may be the second biggest event of 2024.
Bernstein analyst Gautam Chhugani explained that the 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 a one-time new buying and ongoing participation in future fund inflows.'
Bloomberg senior ETF analyst Eric Balchunas today estimated that MSTR will obtain about 0.47% weight in the Nasdaq 100 Index, becoming the 48th largest component.
This weight translates to approximately $2.1 billion of MSTR being purchased through all ETFs tracking the index, with total assets under management of these ETFs about $451 billion.
We did not include separately managed accounts (SMA) or collective investment trusts (CIT) or any active strategies, so the final amount may be slightly higher.
Is Bitcoin expected to benefit?
We know that MicroStrategy has purchased over 420,000 Bitcoins through the large issuance of corporate bonds, and now with its inclusion in the Nasdaq 100 Index, it is expected to continue to lift the company's stock. This behavior is favorable for its future ongoing issuance of corporate bonds, so it can be speculated that the company will continue to buy Bitcoin for a longer period, potentially driving Bitcoin prices to continue to grow.
Next stop, S&P 500 Index?
As MicroStrategy successfully leverages its Bitcoin investment strategy to join the Nasdaq 100 Index, the market is paying attention to the possibility of MicroStrategy being included in the S&P 500 Index in 2025, although some analysts believe this remains challenging.
Gautam Chhugani noted that 'due to the profitability of MicroStrategy's software business, being considered for inclusion in the S&P 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 regarding Bitcoin valuation may allow MicroStrategy to qualify in 2025.'
James Van Straten analyzed: 'According to game theory, tracking the SP 500 Index SPDR S&P 500 Trust (SPY) is the largest among all ETFs, with assets under management of about $650 billion, and MSTR may need to be included to compete with its rivals.'
If MicroStrategy successfully joins the S&P 500 Index, it will see more significant fund inflows into MSTR, and 'millions of mainstream investors will indirectly be exposed to Bitcoin, increasing Bitcoin's flywheel effect.'
