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- MicroStrategy is inching closer to being one of the top 500 companies in the US, which would make it eligible for inclusion in the S&P 500 market index.
- Being part of this index would mean that Bitcoin would be part of every other investment portfolio, as MicroStrategy is the largest public BTC holder.
MicroStrategy could push its way into the Standard and Poor’s 500, or S&P 500 stock market index in the near future, sparking the largest Bitcoin adoption routes ever and creating a feedback loop that would attract billions into the crypto industry.
The S&P 500 is a stock market index that tracks the performance of the top 500 publicly traded companies in the US. One of the most followed indices globally, the S&P 500 encompasses over 80% of the total market cap of all public US companies at over $42 trillion.
At press time, MicroStrategy ranks 535th, dipping 25 positions in the past day as its stock shed 6.74% to change hands at $718. However, since the month began, its stock has been on a roll, adding nearly $4 billion to its market cap.
In fact, MicroStrategy, which trades under the ticker symbol MSTR on Nasdaq, has skyrocketed from $1.63 billion at the start of last year to $12.11 billion today, one of the best performances by any stock globally in that time. Bitcoin has been the key factor behind its price surge, and the company could now be the key factor behind Bitcoin going on its wildest price surge.
MicroStrategy to Enter S&P 500: What It Means for Bitcoin
Getting into the S&P 500 isn’t as simple as being among the 500 largest companies. For instance, Coinbase has a market cap of $40 billion and is ranked 223rd on the market cap list in the US, and yet, it’s not a member of the all-important index.
To enter the index, other factors come into play, among them being the market cap. Under the previous rules, a company had to hit $14.5 billion, but under updated rules, which took effect on Jan. 2, the figure stands at $15.8 billion.
The company must also have been profitable in its most recent earnings quarter and net profit in its previous four quarters. After jumping all the hoops, the company would then have to cross its fingers and hope that the S&P committee votes in its favor. This powerful committee can also choose to knock out a company that’s been in the index, like it did with Tesla in May 2022.
If MicroStrategy pushes through all these requirements and enters the S&P 500, Bitcoin will be the ultimate winner. According to Joe Burnett, a senior executive at Unchained, this would create a feedback loop that ends up with Bitcoin hitting new price levels.
Burnett observed that trillions of dollars flow into index funds, with those tracking the S&P 500 attracting the most money. This would lead to an increase in the market value of MicroStrategy as the index funds purchase MSTR stock.
As a result, MicroStrategy could issue new shares and use the proceeds to purchase more Bitcoin. After all, it has been doing this on a smaller scale for years. The company currently holds 174,530 BTC, worth $ 9.12 billion. For context, Galaxy Digital, second on the list, holds a tenth of this at 17,518.
Back to the loop—once the value of BTC increases, the stock price of MicroStrategy will appreciate, and it will issue more shares to buy more BTC, pushing the crypto up further, and the loop continues.
Saylor found the infinite money glitch:
• Buy #Bitcoin
• MSTR goes up
• Take out more debt
• MSTR goes up
• Sell personal holdings
• MSTR goes up
• Issue more stock
• MSTR goes up
• Join the S&P 500
• MSTR goes upThis is the playbook of the century. 🤯
— The ₿itcoin Therapist (@TheBTCTherapist) February 15, 2024
