A micro-strategy listing in the S&P 500 index could expose millions to Bitcoin.
MicroStrategy, Bitcoin's largest corporate owner, is slowly creeping towards qualifying for inclusion in the S&P 500 index – a milestone in which Bitcoin companies can appear in “almost every portfolio”.
A company focused on Bitcoin (BTC) still needs to meet strict eligibility criteria and ensure a significant increase in market value.
MicroStrategy rose to No. 535 among the largest publicly traded companies in the United States on Feb. 15, following an eight-day trading session that saw its share price rise 46 percent, the data showed.
The S&P 500 index, which tracks the 500 largest companies listed on a stock exchange in the US, requires a company to meet a number of eligibility criteria, including a minimum market capitalization requirement and positive earnings over the past four quarters. Besides being profitable in the most recent quarter.
At least 250,000 shares must be traded in the last six months and a majority of the shares must be in public hands.
Under current law, candidate firms need a market capitalization of $15.8 billion to qualify. MicroStrategy's market cap is set at $12.1 billion, which means its current price of $718 would have to rise to $937 if all else equal.
MicroStrategy stock, however, has posted positive totals over the past four quarters, including the most recent quarter.
Even if the requirements are met, S&P's 11-member executive committee must approve the micro-strategy list. The committee temporarily removed electric car maker Tesla from the S&P 500 ESG Index in May 2022.
Broad index funds offer balances on the third Friday of each March, June, September and December.
Bitcoin in the “everything” portfolio
If MicroStrategy succeeds in seeking an S&P 500 listing, Bitcoin exposure in all ETF portfolios “could create a huge positive feedback loop,” said Joe Burnett, senior product marketing manager at Bitcoin financial services firm Unchained.
Rising market value and TTM profitability could keep $MSTR eligible for the S&P 500, pending approval by the US Index Committee.
If MSTR is included, it can create a massive positive feedback loop that allows #bitcoin to automatically start infiltrating every portfolio. pic.twitter.com/2e4m6oXGJu
— Joe Burnett (@IIICapital) February 15, 2024
If the microstrategy is included in the S&P 500, bitcoin will “automatically start infiltrating every portfolio,” Burnett said. “This includes your traditional 401k, your retirement fund and each 60:40 portfolio.”
The three largest exchange-traded funds under management track the S&P 500 — State Street's SPDR S&P 500 ETF Trust, BlackRock's iShares Core S&P 500 and Vanguard S&P 500 ETF each have more than $400 billion in assets, according to VettaFi's ETF database.
If MicroStrategy were to invest in the S&P 500, the portfolio's weighting would be around 0.01% of the index fund.
The data shows that the S&P 500 currently has a market capitalization of $41.9 trillion, which means that the micro-strategy takes a passive capital allocation of $12 billion with a 0.01% weighting.
“Volatility Index Moves Markets. It will be inclusive. [equal] “Automated buybacks, increasing share prices, enabling more equity issuance for BTC purchases will lift the share price further and attract more volatile flows,” Burnett said in a separate X post.
Sayler finds endless financial trouble:
• Buy #Bitcoin • MSTR Rises • Issue More Debt • MSTR Rises • Sell Private Equity • MSTR Rises • Issue More Stocks • MSTR Rises • Join S&P 500 • MSTR Rises
This is the playbook of the century.
— The ₿itcoin Therapist (@TheBTCTherapist) February 15, 2024
Related: MicroStrategy Buys $37M in Bitcoin, Brings Holdings to 190,000 BTC
Microstrategy currently holds 190,000 BTC at an average purchase price of $31,224 – which means the company has raised $3.9 billion on its investment.
Michael Saylor, the company's founder and chairman, announced on February 9 that MicroStrategy was transitioning from a business intelligence firm to a “Bitcoin development firm.”
MicroStrategy is a #Bitcoin development company.
— Michael Saylor⚡️ (@saylor) February 9, 2024
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