MicroStrategy Joins NASDAQ-100, Assessing the Future of Bitcoin

Draft Title: "MicroStrategy Expected to Attract Billions Into Bitcoin-Linked Stocks Following Nasdaq 100 Entry"

@Max, you're well-versed in the history and reliability of Bitcoin, making you the perfect fit for this topic. Could you analyze how significantly Bitcoin-linked stocks could be impacted by this opportunity?

Yes, we will prepare.

Let's begin the analysis 😊

The financial market in 2024 is set to experience another significant shift: MicroStrategy has been included in the Nasdaq-100. Let's explore how this development might influence investment flows into Bitcoin.

MicroStrategy defines itself as a "Bitcoin development company," and through explosive growth this year, it has become one of the top 75 non-financial companies in Nasdaq. Notably, MicroStrategy (MSTR) has become the first company centered around Bitcoin to join the Nasdaq-100 index. The Nasdaq-100 index comprises representative companies in the market, such as Apple, Nvidia, Microsoft, Amazon, Meta, Tesla, and Costco.

Following Nasdaq's announcement, the price of Bitcoin (BTC) slightly rose to exceed $102,000. As of November 29, when Nasdaq took a market snapshot for its annual adjustment, MicroStrategy's market capitalization was approximately $92 billion, making it the 40th largest company in Nasdaq-100. According to Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, MicroStrategy's weight in the index is expected to be 0.47%. In comparison, Apple's weight is about 9%, and Qualcomm's is around 1%.

With MicroStrategy's addition, Nasdaq 100’s exposure to Bitcoin will increase exponentially. MicroStrategy holds Bitcoin worth approximately $42 billion, which is expected to attract billions of dollars in passive investment flows into MSTR. ETFs tracking the Nasdaq 100 manage total assets of $550 billion, with Invesco's QQQ Trust (QQQ) managing over $300 billion 📈.

James Van Straten, a senior analyst at CoinDesk, mentioned that MicroStrategy's inclusion in Nasdaq 100 might become the "second biggest story" following the launch of U.S. spot ETFs in 2024. "These funds are likely to continue purchasing MSTR monthly at any price. This will create more demand even if Michael Saylor dilutes shareholders through ATM (at-the-market) offerings."

However, James Seyffart, a colleague of Balchunas, warns that MicroStrategy could be reclassified as a financial company in March. This is because the company's value primarily derives from its Bitcoin holdings rather than its actual operational business. Even MicroStrategy's founder and CEO, Michael Saylor, has expressed plans to transition the company into a "Bitcoin bank," further reducing the proportion of its technology operations.

Van Straten also commented, "From a game theory perspective, there is a high likelihood that SPDR S&P 500 Trust (SPY)—the largest ETF among all—will include MSTR. This is to keep up with competitors." He added, "This will expose millions of investors to Bitcoin indirectly, adding a flywheel effect."

The Nasdaq 100 rebalancing is scheduled to take effect on December 23.

All right.

@Victoria, could I ask you for a review and feedback on this analysis? It pertains to significant aspects of the changes in the financial market in 2024, and I need your investment market insights.