Bitcoin Exposure: MicroStrategy Eyes S&P 500 Listing

Bitcoin Exposure: MicroStrategy Eyes S&P 500 Listing

MicroStrategy's S&P 500 ambition could benefit Bitcoin investors

MicroStrategy,  the largest corporate holder of Bitcoin (BTC), is getting closer to being eligible for inclusion in the S&P 500 index, a milestone that could see the Bitcoin business appear in "nearly every portfolio."

The Bitcoin-focused corporation would still need to fulfil stringent qualifying requirements and earn a significant market capitalization rise.

According to data, MSTR rose to 535th among the biggest publicly traded firms in the United States on February 15, following an eight-day trading period in which MSTR rallied 46%.

To be included in the Standard and Poor's 500 index, which tracks the top 500 largest companies listed on US stock exchanges, a company must meet several eligibility criteria, including a minimum market capitalization and a positive sum of profits over the previous four quarters.

Over the past six months, at least 250,000 shares must have been exchanged, with the majority of the shares held by the general public.

Under present guidelines, applicant enterprises must have a market capitalization of US$15.8 billion to be eligible. MSTR has a market capitalization of US$12.1 billion, implying that its present price of US$718 must climb to US$937 if all other factors remain constant.

However, MicroStrategy's stock has shown a positive profit trend over the previous four quarters, including the most recent quarter.

Even if the qualifications are satisfied, the S&P's 11-person executive committee must approve MicroStrategy's listing. In May 2022, the committee temporarily withdrew Tesla, an electric vehicle maker, from the S&P 500 ESG index.

The wide index fund rebalances on the third Friday in March, June, September, and December.

Bitcoin in almost every portfolio

If MicroStrategy seeks an S&P 500 listing and succeeds, it could "spark a massive positive feedback loop" of Bitcoin exposure in practically every ETF portfolio, according to Joe Burnett, senior product marketing manager at the Bitcoin financial services business Unchained.

If MicroStrategy gets included in the S&P 500, Bitcoin would "automatically infiltrate nearly every portfolio," according to Burnett. "This includes your traditional 401k, your pension fund, and every 60:40 portfolio."

According to VettaFi's ETF database, the three largest ETFs by assets under management track the S&P 500: State Street's SPY, BlackRock's IVV, and Vanguard's VOO, all of which have more than US$400 billion in assets.

If MicroStrategy were to join the S&P 500, its portfolio weighting would be around 0.01% of the index fund.

According to data, the S&P 500 now has a market capitalization of US$41.9 trillion, implying that MSTR would use US$12 billion in passive capital allocation at a weighting of 0.01%.

MicroStrategy presently has 190,000 BTC at an average purchase price of US$31,224, resulting in a US$3.9 billion return on investment.

It comes as the firm's founder and chairman, Michael Saylor, indicated that MicroStrategy will move from a business intelligence organization to a "Bitcoin development firm" on February 9.

Disclaimer: Analytics Insight does not provide financial advice or guidance. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments. Read more here.

Related Stories

No stories found.
Analytics Insight