MicroStrategy joins the Nasdaq 100 index, marking a milestone moment for Bitcoin concept stocks.

The official Nasdaq announced the annual restructuring results of the Nasdaq-100 Index on December 13. Notably, MicroStrategy (MSTR), which self-identifies as a Bitcoin company and has experienced explosive growth this year, will be included in the index, becoming one of the 75 largest non-financial companies on Nasdaq. This move will significantly increase the Nasdaq-100 Index's exposure to Bitcoin while also attracting billions of dollars in passive investment attention to MSTR.

Currently, the Nasdaq-100 Index includes the largest non-financial companies listed on the Nasdaq exchange, including market leaders such as Apple, Nvidia, Microsoft, Amazon, Meta, Tesla, and Costco.

Some analysts believe that MicroStrategy's inclusion in the Nasdaq 100 Index could be the second biggest news of 2024, second only to the U.S. listing of a Bitcoin spot ETF. These funds typically make purchases every month, regardless of price levels, which will bring a new group of buyers to MSTR.

A senior ETF analyst stated that MicroStrategy's inclusion in the Nasdaq 100 Index symbolizes a shift in the times. It is estimated that MSTR will have a weight of 0.47%, making it the 48th largest holding. This weight corresponds to approximately $2.1 billion in purchases through all ETFs tracking the index, which have a total value of $451 billion.

However, some analysts have warned that MicroStrategy's inclusion in the index may be temporary. Since the company's value comes almost entirely from its Bitcoin holdings rather than its actual operating business, it may be reclassified as a financial company in March. MicroStrategy founder and executive Michael Saylor even stated that he plans to transform the company into a "Bitcoin bank," making it less like a technology company.

There is a market view that if the largest ETF includes MSTR, then millions of investors will indirectly invest in Bitcoin, thereby increasing the flywheel effect.

The restructuring results of the Nasdaq 100 index and related ETFs will take effect before the market opens on December 23.

A Review of MicroStrategy's Bitcoin Strategy

Since mid-2020, MicroStrategy co-founder and chairman Michael Saylor decided to invest in Bitcoin to hedge against inflation. The company initially used cash for acquisitions and has now shifted to enhancing its purchasing power through issuing and selling stocks and convertible bonds.

This strategy, combined with the surge in Bitcoin value, has helped MicroStrategy's performance surpass that of all major U.S. stocks, including AI leader Nvidia. Since August 2020, MicroStrategy's stock price has risen by over 2500%, while Bitcoin has increased by about 660% during the same period.

As of November 8, 2024, this Virginia-based company holds a total of 423,650 Bitcoins, with a total purchase price of $25.6 billion and an average cost of $60,324 per coin. MicroStrategy is currently the second largest publicly traded company holder of Bitcoin.

MicroStrategy has used "BTC Yield" as an indicator to measure its Bitcoin acquisition strategy. This metric reflects the percentage change in the number of Bitcoins owned by the company per share over different periods. As of November 17, assuming that all of the company's convertible debt has been converted into shares, every 1,000 outstanding shares will own 1.29 Bitcoins, which is an increase of 41.8% compared to December 31 of last year.

MicroStrategy stated that starting next year, they will strive to increase the BTC yield to a range of 4% to 8%.

Introduction to the Nasdaq 100 Index

The Nasdaq-100 Index consists of the 100 largest non-financial companies listed on the Nasdaq stock market, with a history dating back to January 1985. The index was launched alongside the Nasdaq Financial 100 Index, which is composed of the 100 largest financial stocks listed on Nasdaq. These indices serve as benchmarks for financial products such as options, futures, and funds.

The Nasdaq 100 undergoes rebalancing every December, coinciding with the expiration dates of stock index futures, stock index options, stock options, and individual stock futures (referred to as quadruple witching expiration date).

The index is the basis of the Invesco QQQ Trust and aims to provide investment results that correspond to the performance of the NASDAQ-100 Index (before fees). Additionally, derivatives based on the NASDAQ-100 Index and the Invesco QQQ Trust are also traded on multiple exchanges.