Financial Information
December 3, 2024

Will Bitcoin's $100K Milestone Trigger Nasdaq Addition for MSTR?

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In the ever-evolving landscape of digital currency, Bitcoin has undeniably captured the spotlightThis cryptocurrency, which began its journey 15 years ago with an insignificant value of only a few cents, has soared to unimaginable heights, recently surpassing the monumental mark of $100,000, creating a staggering wealth story along the way.

On the morning of December 5th, a landmark moment in financial history was cemented as Bitcoin crossed the $100,000 per coin thresholdWith the price peaking at $102,814.5 per coin by the time of this dispatch, the rise of Bitcoin over the past five years has been nothing short of astronomical, amassing an impressive increase of 1,267%. This figure is a testament to the immense potential energy and significant influence Bitcoin holds within the financial markets today.

As Bitcoin prices have surged, so too has the interest in MicroStrategy (MSTR), a leading company in the Bitcoin ecosystem

Analysts widely believe that MSTR is a strong candidate for inclusion in the NASDAQ 100 indexShould this inclusion come to fruition, the company would seamlessly enter the realm of the Invesco QQQ ETF (QQQ), an investment fund representing a market cap worth $312 billion that tracks the NASDAQ 100 index.


If MSTR successfully joins the QQQ, the implications are profoundThis move would position MSTR alongside industry behemoths like NVIDIA and Apple, integrating into an ETF that boasts billions in daily trading volume and a consistent growth trajectoryConsequently, MSTR would secure access to a passive and continuous infusion of capitalAs Jeff Park, Chief Strategist at Bitwise, aptly noted, “This initiative would present an opportunity for a multitude of investors, who might not independently consider MSTR stock, to become acquainted with it

Thus, it would vastly broaden MSTR’s investor base and capitalize on diverse funding sources.”


Numerous analysts have pointed out that once MSTR is officially inducted into the NASDAQ 100 index, the Invesco fund will automatically purchase MSTR shares to accurately balance out its weighted representation in the indexEstimates suggest this operation could inject over $1 billion into MSTR, providing robust financial backing and dynamic capital support for future endeavors.

Moreover, MSTR's inclusion will not only affect itself but will also significantly impact the NASDAQ 100 index and QQQ

This integration implies a closer relationship and dependency on Bitcoin, altering the trajectory of these financial instrumentsTesla provides a fitting comparison; although it is entrenched within the index and ETF and holds approximately $900 million in Bitcoin, its holdings pale in comparison to MSTR's staggering $37 billion exposure to the cryptocurrencyBen Werkman, founder of the quantitative research firm NumerisX, remarked, “For millions of investors reliant on passive investment strategies, holding ETFs like QQQ indirectly brings Bitcoin into their portfoliosThese funds generally adhere to fixed rules that lead to continuous purchases irrespective of price fluctuations, potentially exerting substantial upward pressure on MSTR’s stock price and influencing the prevailing market landscape and investment climate.


The NASDAQ 100 index, which tracks the 100 largest non-financial companies listed on the NASDAQ exchange, undergoes extensive adjustments every December

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These adjustments are meticulously enacted by Invesco following an announcement from NASDAQThe results of this year’s adjustments will be publicly disclosed on December 13th, marking another pivotal moment for major stocks and index funds.


Currently, MSTR meets all criteria required for entry into the NASDAQ 100 index, ranking 66th among qualifying companies by market capitalizationTypically, companies ranked in the top 75 are automatically inducted into the indexHowever, challenges remainAnalysts have raised questions about how the NASDAQ committee will define MSTR’s characteristicsWill it be regarded as purely a non-financial company? Mark Palmer, Managing Director at Benchmark, commented, “While MSTR indeed qualifies on all counts, its distinct and substantial Bitcoin acquisition strategy may present complex considerations for the NASDAQ committee during their assessment

The decision-making process may not be as straightforward as customary.” This uncertainty creates suspense regarding MSTR's likelihood of securing a spot in the NASDAQ 100 index, with the entire financial sector eagerly watching for the final outcome.


In conclusion, the trajectory of Bitcoin and its intertwined companies, notably MicroStrategy, exemplifies how cryptocurrency continues to reshape traditional financial landscapesAs institutional interest escalates and regulatory frameworks evolve, Bitcoin's integration into established financial instruments like the NASDAQ 100 and QQQ underscores its transformation from a speculative asset into a mainstream investment vehicleThe eventual inclusion of MSTR in the NASDAQ 100 could be a definitive moment that signifies Bitcoin's maturation within the financial ecosystem, generating widespread discussions about the future of digital currencies and their footprint in global finance.

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