MicroStrategy Set to Join Nasdaq 100 as Bitcoin Strategy Pays Off

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MicroStrategy, a software company famous for its bold Bitcoin strategy, is on track to be included in the prestigious Nasdaq 100 Index. The Nasdaq 100, which includes the largest non-financial companies, might soon see MicroStrategy join its ranks, replacing underperforming firms like Moderna. The official announcement is expected this week, with inclusion set for December 23, according to Bloomberg analysts.

MicroStrategy’s Bitcoin Bet Pays Off

James Seyffart and Eric Balchunas both pointed out that MicroStrategy’s rise has been linked to its decision to hold large amounts of Bitcoin. Since adopting a Bitcoin-first strategy in 2020, the company has accumulated over 423,000 Bitcoin, making it a prominent player in the crypto space. The move has made them traditional Wall Street investors. As a result, MicroStrategy’s influence has grown, and its stock has surged, with its market value increasing from $54.8 billion to $82 billion in just a month.

Inclusion into the Nasdaq 100

MicroStrategy is on track to meet the strict criteria required for inclusion in the Nasdaq 100. To qualify, companies must have been trading on the exchange for at least two years and must have a daily trading volume of at least 200,000 shares. MicroStrategy, under the leadership of Chairman Michael Saylor, fulfills these conditions. Analysts predict that if the company is included, it would become the 40th largest holding in the Nasdaq 100, with a weighting of around 0.47%. This would also attract significant investment, with $2.1 billion in ETF shares expected to flow into the company.

A Leap of Faith

MicroStrategy’s potential inclusion in the Nasdaq 100 is a big milestone for both crypto and traditional finance. By holding large amounts of Bitcoin, the company has sparked interest from other tech firms like Tesla and Metaplanet. Its stock has surged 450% this year, making it a key link between crypto and the stock market. While it faces challenges in joining the S&P 500 due to profitability rules, changes in Bitcoin accounting by 2025 could make that possible. 

On the Downside…

Despite the positive vibes, MicroStrategy’s stock MSTR’s price could face significant ups and downs due to its close ties with Bitcoin which is hanging around $97k. The company’s market value is partly based on a “premium” over its Bitcoin holdings. If this premium disappears, analysts warn that its stock could drop sharply, potentially below $170 per share.

This risk comes from Bitcoin’s price movements, as MicroStrategy owns a large amount of the cryptocurrency. Last month, the company’s shares reached about $543, which means there’s a potential for big losses if the stock price drops. This volatility might make some investors think twice before buying.