MicroStrategy shares climbed 6% in premarket trading on Monday as the software company and prominent Bitcoin holder prepared to join the Nasdaq 100 index, a move that could further fuel its stock rally.
The $25.7 trillion Nasdaq 100, which includes the largest non-financial companies, will now have indirect exposure to Bitcoin through MicroStrategy. The company holds $44 billion worth of Bitcoin on its balance sheet, representing approximately 2% of the cryptocurrency’s total supply.
The addition to the index is expected to attract more buying from funds that track the Nasdaq 100, potentially boosting MicroStrategy’s stock further. The company’s shares have already soared nearly 550% this year, mirroring the surge in Bitcoin prices.
MicroStrategy has more than doubled its Bitcoin holdings in 2023 through equity and debt offerings.
“This could mark the start of a self-reinforcing cycle of capital inflows, potentially driving up Bitcoin’s spot price,” said Matthew Dibb, Chief Investment Officer at Astronaut Capital, a cryptocurrency asset management firm.
He added, “ETFs like QQQ and others tracking the Nasdaq 100 would purchase MicroStrategy shares to replicate the index’s holdings, increasing the stock’s price and enabling the company to acquire more Bitcoin via debt, bonds, or equity.”
The Invesco QQQ Trust, the largest ETF tracking the Nasdaq 100, manages $322 billion in assets, according to Morningstar.
Bitcoin hit a record high of over $106,000 on Monday after President-elect Donald Trump suggested creating a U.S. Bitcoin strategic reserve, similar to the country’s strategic oil reserve.
Since adopting Bitcoin as its treasury asset in 2020 under the leadership of co-founder Michael Saylor, MicroStrategy’s shares have skyrocketed by 3,200%. Despite this, the company reported a net loss of $340 million for the three months ending September 20, marking its third consecutive quarterly loss.MicroStrategy’s market capitalization surged to over $100 billion based on its latest premarket share price, more than double the value of its Bitcoin holdings.
“Over the long term, this represents a significant milestone for the crypto space,” said Matthew Dibb, Chief Investment Officer at Astronaut Capital. “We can expect both bullish and bearish commentary about MicroStrategy and Michael Saylor to grow louder in the months ahead.”
Nasdaq announced on Friday that other additions to the Nasdaq 100 include Palantir (NASDAQ:PLTR) and Axon Enterprise (NASDAQ:AXON), replacing Illumina (NASDAQ:ILMN), Super Micro, and Moderna (NASDAQ:MRNA). The restructured index will take effect on December 23.
Following the announcement, Super Micro shares dropped 10.6%, while Palantir gained 2.1%.
