MicroStrategy, which brands itself as a Bitcoin Development Company, has achieved significant growth this year, propelling it to become one of the 75 largest non-financial firms on the Nasdaq.
Key Highlights:
- Nasdaq’s annual reshuffling of the Nasdaq 100 Index now includes MicroStrategy.
- A recent analysis places MicroStrategy as the 40th-largest company in the index.
- This inclusion earns MicroStrategy a position in one of the world’s largest exchange-traded funds (ETFs), Invesco’s QQQ Trust (QQQ), which manages over $300 billion in assets.
MicroStrategy (MSTR) is set to join the Nasdaq-100 Index, making it the first bitcoin-focused company to achieve this milestone. The Nasdaq-100 Index tracks the 100 largest non-financial companies on the Nasdaq exchange, featuring household names such as Apple, Nvidia, Microsoft, Amazon, Meta, Tesla, and Costco.
Market Reaction
Following the Friday 8 p.m. ET announcement, Bitcoin (BTC) saw modest gains, surpassing $102,000. On November 29—the date Nasdaq took a market snapshot for its annual rebalancing—MicroStrategy’s market capitalization stood at approximately $92 billion. This valuation ranks it as the 40th-largest company in the index, with an estimated weighting of 0.47%, according to Bloomberg Intelligence senior ETF analyst Eric Balchunas. By comparison, Apple held the largest weighting at just under 9%, while Qualcomm, ranked 20th, had a weighting slightly above 1%.
Implications for Bitcoin and ETFs
MicroStrategy’s inclusion significantly increases the Nasdaq 100’s exposure to Bitcoin, as the company holds approximately $42 billion worth of the cryptocurrency. This move also positions MSTR for billions of dollars in passive investment flows. ETFs tied to the Nasdaq 100 collectively manage over $550 billion in assets, with Invesco’s QQQ Trust alone accounting for more than $300 billion.
“The inclusion of MicroStrategy in the Nasdaq 100 is possibly the second-biggest story of 2024, following the launch of U.S. spot-listed Bitcoin ETFs,” said James Van Straten, senior analyst at CoinDesk. “These funds buy regularly at any price level, which will add to the demand for MSTR. When Michael Saylor continues to issue at-the-market (ATM) offerings to raise capital, there will be a larger base of buyers.”
Potential Challenges
However, some analysts warn that MicroStrategy’s inclusion in the Nasdaq 100 might be temporary. James Seyffart of Bloomberg Intelligence notes that the company could be reclassified as a financial firm in March 2024, given that its value is derived almost entirely from Bitcoin holdings rather than its core business operations. Founder and Executive Chairman Michael Saylor has previously expressed plans to transform MicroStrategy into a “Bitcoin bank,” which would further distance it from the technology sector.
Broader Market Dynamics
Van Straten also speculated on the potential ripple effects of this development, stating, “The game theory now suggests that the SPDR S&P 500 Trust (SPY), the largest ETF with about $650 billion in assets, might consider including MSTR to compete with their rivals. Millions of investors will now have indirect Bitcoin exposure, amplifying the flywheel effect.”
The Nasdaq 100’s rebalancing, along with adjustments to the QQQ and related ETFs, will take effect on December 23, marking a milestone for both MicroStrategy and the broader cryptocurrency ecosystem.
