The week following holiday celebrations saw MicroStrategy’s inclusion in the Nasdaq 100 index, sparking speculation that its stock price would see a temporary boost. However, the opposite occurred, with MSTR’s share price dropping by 22% since the market opened on December 16th. End-of-year profit-taking and the recent decline in Bitcoin prices are considered contributing factors to this dip. Despite this, analysts highlight the significance of MicroStrategy’s inclusion in the index due to the substantial funds that allocate to Nasdaq 100 constituents, particularly Invesco’s QQQ ETF with $325 billion in assets.
The acceptance by institutional investors and the potential for institutional adoption of MicroStrategy’s strategy by joining the Nasdaq 100 index is seen as a positive development. The focus for 2025 is whether MSTR could secure a spot in the S&P 500 index, which includes companies with even higher levels of assets. While some view this as a “reach” for the next year, it is considered an inevitable progression. For MicroStrategy to qualify, it would need to demonstrate positive earnings for the most recent quarter and for the last four quarters. By adopting new FASB guidance on accounting for BTC on balance sheets, MSTR aims to report positive earnings as early as Q1.
The trend of companies holding Bitcoin as a treasury asset is becoming more prevalent, with the proposal of a Bitcoin Standard Corporations ETF by asset manager Bitwise. This offering would invest in companies with market caps over $100 million that hold at least 1,000 BTC in their corporate treasury. MicroStrategy, with its substantial BTC holdings, fits this criteria along with other major Bitcoin miners like Marathon Digital, Hut 8, Riot Platforms, and CleanSpark. In addition, companies like Metaplanet and KULR Technology Group are also increasing their BTC holdings, indicative of the growing interest in digital assets.
The overall market reaction to MicroStrategy’s inclusion in the Nasdaq 100 index and the potential for future inclusion in the S&P 500 reflects a broader institutional acceptance of cryptocurrency as a legitimate investment asset. While the recent price fluctuations may have influenced MSTR’s stock performance in the short term, the company’s strategic approach to Bitcoin holdings and financial reporting has positioned it well for potential future growth. With an increasing number of companies embracing Bitcoin as a treasury asset, the landscape of corporate finance and investment is evolving to accommodate these digital assets in a more significant way. As we move into 2025, it will be interesting to see how MicroStrategy and other companies navigate this new financial frontier.
