MicroStrategy (MSTR) will soon be added to one of the world’s largest exchange-traded funds after becoming the first Bitcoin-centric company to be added to the Nasdaq 100 index.
The Nasdaq 100 index tracks the 100 largest non-financial companies listed on the Nasdaq exchange and includes dominant names such as Apple, Nvidia, Microsoft, Amazon, Meta, Tesla and Costco.
The price of Bitcoin (BTC) marginally extended its earlier gains and surpassed $102,000 in the minutes after Friday at 8:00 p.m. ET Nasdaq press release announce the admission.
As of Nov. 29, the day the Nasdaq compiled a market review in preparation for the index’s annual rebalancing, MicroStrategy had a market capitalization of about $92 billion. That would make the Michael Saylor-led company the 40th largest company in the Nasdaq 100 and have a likely weighting in the index of 0.47%. accordingly Eric Balchunas, senior ETF analyst at Bloomberg Intelligence.
In comparison, Apple – before this year’s realignment – had the largest weighting in the index at just under 9%; Qualcomm had the 20th largest weighting at just over 1%.
The addition will exponentially increase the Nasdaq 100’s exposure to Bitcoin (BTC), in which MicroStrategy owns approximately $42 billion, and expose MSTR to billions of dollars in passive investments. ETFs tracking the Nasdaq 100 manage more than $550 billion in assets, Balchunas said. By far the largest is Invesco’s QQQ Trust (QQQ), with more than $300 billion in assets under management.
“MicroStrategy’s addition to the Nasdaq 100 may be the second-biggest story of 2024 after the launch of U.S.-listed ETFs,” said James Van Straten, senior analyst at CoinDesk. “These funds are often monthly buyers at any price level, which will result in another buyer of MSTR as Michael Saylor continues to issue the market offering (ATM) to dilute shareholders, but will have a larger base .”Buyer.”
Balchunas’ colleague James Seyffart warns There is a possibility that MicroStrategy’s inclusion in the index could be short-lived, as the company could be reclassified as a financial company in March as its value comes almost entirely from its Bitcoin holdings rather than its actual operations . MicroStrategy founder and CEO Michael Saylor has even previously said that he plans to transform the company into a “Bitcoin bank,” making it even less of a technology company.
“Game theory now suggests that the SPDR S&P 500 Trust (SPY), the largest of all ETFs with an AUM of approximately $650 billion, may need to include MSTR to compete with its competitor,” van Straten added added. “Millions of investors will now have indirect exposure to Bitcoin, further reinforcing the flywheel effect.”
The reorganization of the Nasdaq 100 and thus the QQQ and the associated ETFs will come into force on December 23rd.
Leave a Reply