MicroStrategy joins the Nasdaq 100 Index, Bitcoin concept stocks enter the mainstream

On December 13, Nasdaq announced the annual restructuring results of the Nasdaq-100 Index. Notably, MicroStrategy (MSTR), which has gained significant attention in recent years for its large investments in Bitcoin, will be included in the index, becoming one of the 75 largest non-financial companies. This change will significantly increase the Nasdaq-100 Index's exposure to Bitcoin, while also giving MSTR the opportunity to attract more passive investment capital.

Currently, the Nasdaq 100 index includes tech giants such as Apple, Nvidia, Microsoft, Amazon, Meta, and Tesla. The addition of MicroStrategy is undoubtedly a milestone event, reflecting the trend of integration between the cryptocurrency industry and traditional financial markets.

Industry analysts believe that MicroStrategy's entry into the Nasdaq 100 index could be a significant event in 2024, second only to the approval of the U.S. Bitcoin spot ETF. This change will bring a new group of buyers for MSTR, especially as the company continues to dilute shareholder equity through market-price issuances.

According to estimates, MSTR's weight in the index could reach 0.47%, making it the 48th largest holding. This means that ETFs tracking the index may need to purchase approximately $2.1 billion worth of MSTR shares. However, some analysts have warned that since MicroStrategy's value mainly comes from its Bitcoin holdings rather than actual business operations, the company could be reclassified as a financial company in March next year.

MicroStrategy began implementing its Bitcoin investment strategy in mid-2020, aiming to hedge against inflation risks. The company initially used cash for Bitcoin acquisitions and later shifted to issuing stock and convertible bonds to enhance its purchasing power. As of November 8, 2024, MicroStrategy holds 423,650 Bitcoins at a total purchase price of $25.6 billion, with an average cost of $60,324 per coin.

MicroStrategy has also innovatively proposed the concept of "BTC yield" to measure the effectiveness of its Bitcoin acquisition strategy. This metric reflects the percentage change in the number of Bitcoins owned per share of the company over a specific period. As of November 17, MicroStrategy's year-to-date BTC yield has reached 41.8%, demonstrating the significant effectiveness of this strategy.

Since its launch in January 1985, the Nasdaq-100 Index has been an important indicator for tracking the performance of the 100 largest non-financial companies on the Nasdaq stock market. The index is rebalanced every December, providing a benchmark for various financial products. The inclusion of MicroStrategy will take effect before the market opens on December 23, and is expected to have a profound impact on the market.