Bitcoin proxy MicroStrategy to join the Nasdaq 100 and trades a lot in the “QQQ” ETF

MicrostrategyIt will hit the preferred high beta on the price of Bitcoin join up The Nasdaq 100 index, a move that could boost demand for the controversial stock, which has been on a torrid run with the price of cryptocurrencies this year.

The Nasdaq 100 It consists of the 100 largest non-financial technology companies Nasdaq Composite Index. The addition of a stock means ETFs – including the very popular ones Invesco QQQ TrustWith $325 billion in assets – it will also become an automatic buyer.

Bitcoin proxy shares could be set to gain movement. This year they have increased more than six times, in comparison of bitcoin a gain of almost 140% at the same time.

The change, which will take effect before the market opens on December 23, was announced on Friday after the stock market closed. MicroStrategy was widely touted as a potential contender for membership by investors who were expecting a rally in the index this week.

“This would lead to entry of MSTR into some of the largest ETFs such as QQQ (5th largest ETF) etc., leading to one-time fresh buying … and ongoing participation in future flows,” Bernstein analyst Gautam Chhugani said. A note before the remodel this week.

Also, “the market will probably look to enter the S&P 500 by 2025,” Chhugani said. “Today, given the profitability of its software business, it may be difficult to consider joining the S&P 500.”

Nasdaq changes the constitution of the Nasdaq 100 index every year. The companies selected for inclusion are largely based on their market cap ranking on the last trading day in November, November 29 this year. Shares must also meet eligibility requirements regarding liquidity and the free float percentage of their shares.

MicroStrategy originally sold business software, but the company has increasingly become a bitcoin holding company. It first included bitcoin on its balance sheet in 2020, when Michael Saylor was CEO at the time, and has leaned on it. strategy in the years since MicroStrategy now issues convertible notes to leverage its purchases, and daily trading in its stock sometimes looks like a more volatile version of bitcoin.

The company now has a market cap of about $90 billion despite revenue of less than $500 million in the previous four quarters, according to FactSet. Saylor told CNBC “Squawk Box“He sees the task of the company at the beginning of the month”securitization of bitcoin.”

“Primarily, our job is to bridge traditional capital markets that want bonds, or they want fixed income, or they want equity, or they want options, and we plug that into the crypto economy. And we use bitcoin as a vehicle to do that,” he said. said Saylor, who is now the company’s executive chairman.

MicroStrategy began ramping up acquisitions after the US presidential election. Crypto’s victory for President-elect Donald Trump — specifically his pledge to implement a national strategic bitcoin — has pushed bitcoin to new all-time highs, achieved in part by company purchases. MicroStrategy now has 423,650 bitcoins. He bought 149,880 of them in four separate purchases last month, starting on November 11.

As part of MicroStrategy’s hot streak this year, activists have pushed bitcoin investing as an agenda item at shareholder meetings. In companies like Microsoft and Amazon. Mining stocks such as Mara Holdings have also started Using Saylor’s bitcoin yield strategy.

Palantir Technologies and Axon Enterprise it will also enter the Nasdaq 100 this month. the light, modern and Super micro computer it will be removed from the index.

Last year, the Nasdaq 100 added six companies in its annual recap, including DoorDash. Five of those six stocks rose on Monday after the announcement, with an average move of 1.21%.

—with reporting by Jesse Pound.