MicroStrategy (MSTR) Becomes the First Bitcoin-Focused Company Listed within the Nasdaq-100 Index

This step puts the market one step closer to adding crypto business to its existing financial benchmark indices.

Bitcoin-focused company MicroStrategy (NASDAQ:MSTR) will be joining the Nasdaq-100, an index of the 100 largest non-financial companies listed on the Nasdaq stock exchange. The index heavily features technology stocks, including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), Amazon (NASDAQ:AMZN), Meta (NASDAQ:META), and Tesla (NASDAQ:TSLA).

This move brings the market one step closer to adding crypto businesses to its widely followed financial benchmark indexes.

What MicroStrategy's Inclusion Means For Bitcoin Investors

The addition of MicroStrategy to the Nasdaq-100 raises the index's Bitcoin exposure, as the company holds nearly $42 billion in the apex crypto. The Invesco QQQ Trust (QQQ), an ETF that tracks the Nasdaq-100 and has over $300 billion in assets under management, will gain indirect exposure to Bitcoin through MicroStrategy.

Its market capitalization was last valued at $92 billion on November 29, the annual Nasdaq market tally date on which it was rebalanced. This places the company in the 40th position and has an estimated pre-rebalance weight of 0.47%. In comparison, the largest constituent, Apple, had a pre-rebalance weight of nearly 9%.

As tech workers join the company, they could be boosting MicroStrategy stock in a big way, noted Eric Balchunas, senior ETF analyst at Bloomberg Intelligence. “The addition of MicroStrategy changes the model, as these funds are always buying, regardless of the price,” he said.

Highlighting the Opportunities and Risks in Bitcoin-Centric Investments

Being included in the Nasdaq-100 will help MicroStrategy pull in billions of dollars in passive money for its Bitcoin holdings, increasing the demand for the crypto and boosting its presence among mainstream investors. However, some analysts noted that the company's long-term membership in the index may be in jeopardy.

Bloomberg Intelligence senior ETF analyst Eric Balchunas expressed concerns that MicroStrategy might be reclassified as a financial firm, which could lead to its removal from the Nasdaq-100. This reclassification is occurring because it uses its Bitcoin holdings to fund its operations rather than using its operations to fund its holdings. Coming out in support of this notion, Michael Saylor hinted that the company might be adopting the Bitcoin bank model, which will further solidify its financial credentials and move the company even further away from a tech industry classification.

Despite this risk, the implications of this move are largely positive for MicroStrategy and Bitcoin, especially if the company manages to pull off any profitable trades based on its massive Bitcoin holdings. A large number of investors who hold ETFs like QQQs will be indirectly investing in MSTR, further pumping the cryptocurrency into mainstream financial markets.

Broader Market Implications

The inclusion of MicroStrategy in the Nasdaq-100 may also prompt NASDAQ to make changes to other major benchmark indexes. According to experts, the largest ETF in the world, the SPDR S&P 500 Trust (SPY), which has around $650 billion in AUM, might feel the heat of joining the inclusion of MicroStrategy. Doing so would increase its holdings in line with competitors and expand the penetration of Bitcoin into financial products even more.

The new constituents list and adjustments to a range of Nasdaq-100 sub-products will become effective on 23rd December following the rebalance event. In reaction to the announcement, the BTC level increased to $102,000, revealing a stock's expected value when more investors are willing to invest and optimistic about the development.

MicroStrategy's inclusion marks an overlap between the financial industry and the crypto market. Hence, as institutional investors and passive funds embrace such changes, it could act as a tipping point in embracing the crypto asset as the remaining aristocratic layouts gradually surrender to mainstream adoptions.