MicroStrategy, a software company known for its bold Bitcoin strategy, is on track to be included in the prestigious Nasdaq 100 Index. On the Nasdaq 100, which includes the largest non-financial companies, MicroStrategy could soon strengthen its ranks, replacing underperformers like Moderna. The official announcement is expected this week, with recording on December 23, according to Bloomberg analysts.
MicroStrategy’s Bitcoin bet pays off
James Seyffart and Eric Balchunas both be that MicroStrategy’s rise is linked to its decision to hold large amounts of Bitcoin. Since adopting a Bitcoin-first strategy in 2020, the company has amassed more than 423,000 Bitcoin, making it a prominent player in the crypto space. This move has turned them into traditional Wall Street investors. As a result, MicroStrategy’s influence has grown and its shares have soared, with its market value rising from $54.8 billion to $82 billion in just a month.
Inclusion in the Nasdaq 100
MicroStrategy is on track to meet the strict criteria required for inclusion in the Nasdaq 100. To qualify, companies must have traded on the exchange for at least two years and have a daily trading volume of at least 200,000 shares. MicroStrategy, led by Chairman Michael Saylor, meets 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 about 0.47%. This would also attract significant investment, with $2.1 billion in ETF shares expected to flow into the company.
A leap into the deep
MicroStrategy’s potential inclusion in the Nasdaq 100 is a major milestone for both crypto and traditional finance. By owning large amounts of Bitcoin, the company has attracted interest from other technology companies such as Tesla and Metaplanet. Its share price is up 450% this year, making it an important 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 this possible.
On the other hand…
Despite the positive sentiments, MicroStrategy’s MSTR stock price could see significant rises and falls due to its close ties to Bitcoin, hovering around $97,000. The company’s market value is based in part on a “premium” on its Bitcoin holdings. If this premium disappears, analysts warn the stock could fall sharply, possibly to below $170 per share.
This risk comes from Bitcoin’s price movements, as MicroStrategy owns a large portion of the cryptocurrency. Last month, the company’s shares hit around $543, meaning there is the potential for big losses if the stock price falls. This volatility may make some investors think twice before making a purchase.
