MicroStrategy ($MSTR), Bitcoin's most aggressive corporate holder, enters the Nasdaq-100 index on December 23, 2024. Analysts say it may be the second biggest story of the year after the launch of US spot-listed ETFs.
After the annual reshuffle, MicroStrategy joins the Nasdaq-100. It's now the 40th-largest firm in the index.
The Nasdaq-100 Index ($NDX) tracks the top 100 non-financial giants listed on the Nasdaq exchange, featuring powerhouses like Apple, Nvidia, Microsoft, Amazon, Meta, Tesla, and Costco. As one of the largest and most liquid indices in the world, it attracts hundreds of billions in passive investment annually. This influx implies sustained buying pressure for $MSTR.
(Bloomberg Intelligence senior ETF analyst on X)
MicroStrategy's ~$42 billion in Bitcoin holdings and its aggressive Bitcoin-focused strategy increase the Nasdaq-100's exposure to BTC. This links MSTR to significant passive investment flows through ETFs that track the index, which collectively manage $550 billion, with Invesco's QQQ Trust leading at $300 billion in assets under management.
The QQQ ETF mirrors the Nasdaq-100 and ranks among the top-traded ETFs globally. Institutional investors, including pension funds, mutual funds, and insurance firms, heavily invest in the Nasdaq-100. With $MSTR joining this month, this exposure will now automatically include Bitcoin.
(Bitwise Invest head of alpha strategies on X)
Imagine an employee contributing to a pension fund. A portion of their salary goes into a portfolio that includes the QQQ ETF. Starting December 23, this ETF will indirectly channel some of that money into Bitcoin through $MSTR.
Through these passive investment flows, Bitcoin's integration into finance is deepening, establishing a foundational demand base. This shift is monumental, yet few grasp its full impact.
Furthermore, MicroStrategy's inclusion in the $NDX highlights the rising significance and success of its Bitcoin-focused treasury approach.
On the other hand, MicroStrategy's aggressive Bitcoin-centric strategy is exactly what could make its position in the Nasdaq-100 index short-lived, as it may potentially be reclassified as a financial firm by March due to its value deriving almost entirely from its Bitcoin holdings rather than its actual operating business. Obviously, this would automatically imply exclusion from the Nasdaq, which tracks non-financial companies. Michael Saylor himself previously claimed his plans to transform the firm into a "Bitcoin bank."
(Bloomberg Intelligence ETF analyst on X)
After joining the Nasdaq-100, the company will likely aim for the S&P 500 in 2025, as noted by Bernstein analysts. However, this could be much more challenging, given the lack of profitability in MicroStrategy's enterprise software business, which has been increasingly overshadowed by the focus on its Bitcoin strategy.
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