Author: Carbon Chain Value
On December 13, Nasdaq officially announced the results of the annual reorganization of the Nasdaq 100 Index. Among them, MicroStrategy (MSTR), which claims to be a Bitcoin company and has experienced explosive growth this year, will be added to the index and become one of the 75 largest non-financial companies on Nasdaq. It is reported that this addition will double the exposure of the Nasdaq 100 Index to Bitcoin and expose MSTR to billions of dollars in passive investments. Currently, the Nasdaq 100 Index tracks the largest non-financial companies listed on the Nasdaq exchange, including Apple, Nvidia, Microsoft, Amazon, Meta, Tesla, and Costco, which dominate the market.
CoinDesk senior analyst James Van Straten said: MicroStrategy's inclusion in the Nasdaq 100 Index can be regarded as the second biggest news in 2024, second only to the US-listed Bitcoin spot ETF. These funds usually buy at any price level every month, which will add another buyer to MSTR, when Michael Saylor continues to issue at market price (ATM) to dilute shareholders, but the buyer base will be larger.
Bloomberg senior ETF analyst Eric Balchunas said on social media that MicroStrategy's joining the Nasdaq 100 Index is symbolic of the changing times.
Some people are curious: What is the current weight of MSTR in the index? Eric Balchunas said, "We estimate that it will receive a weight of 0.47% and become the 48th largest holding." This weight is equivalent to about $2.1 billion in purchases through all ETFs that track the index, which have a total value of $451 billion. We don't include SMA or CIT or any active strategies, so it may end up being a little more.
However, James Seyffart, another ETF analyst at Bloomberg, warned that MicroStrategy's inclusion in the index may be short-lived because the company's value comes almost entirely from its Bitcoin holdings, not actual operating businesses, so the company may be reclassified as a financial company in March. MicroStrategy founder and executive Michael Saylor even said he planned to transform the company into a "Bitcoin bank" to make it less like a technology company.
There is a market view that the SPDR S&P 500 Trust (SPY), currently the largest of all ETFs with an AUM of about $650 billion, may need to be included in MSTR to compete with its competitors, in which case millions of investors will now indirectly invest in Bitcoin, thereby increasing the flywheel effect.
The results of the reorganization of the Nasdaq 100 Index, as well as QQQ and related ETFs, will take effect before the market opens on December 23.
Review of MicroStrategy's Bitcoin Strategy
Since mid-2020, MicroStrategy co-founder and chairman Michael Saylor decided to invest in Bitcoin as a hedge against inflation. The company initially used cash for acquisitions and has now turned to using proceeds from the issuance and sale of shares and convertible bonds to enhance its purchasing power.
According to previous Zhitong Finance reports, this strategy, as well as the surge in the value of Bitcoin, has helped MicroStrategy outperform all major U.S. stocks, including artificial intelligence leader Nvidia. MicroStrategy's stock price has risen by more than 2,500% since August 2020. During the same period, Bitcoin has risen by about 660%.
As of November 8, 2024, the Tysons Corner, Virginia-based company held a total of 423,650 bitcoins, with a total purchase price of $25.6 billion and an average cost of $60,324 per coin. MicroStrategy is currently the largest publicly traded holder of Bitcoin besides Belai.
According to Wall Street Journal, MicroStrategy has used "BTC yield" as an indicator to measure its Bitcoin acquisition strategy. MicroStrategy explained that the concept of BTC yield refers to the percentage change in the number of bitcoins owned by the company per share between the two dates before and after.
Specifically, as of November 17, assuming that all of the company's convertible debt had been converted into stock, there would be 1.29 bitcoins for every 1,000 shares outstanding. This is a 41.8% increase from December 31 last year, when there were only 0.91 bitcoins for every 1,000 shares. MicroStrategy calls this 41.8% increase "year-to-date BTC yield."
This yield can be calculated based on different time periods, such as quarterly, year-on-year, or any two dates with data can be selected for comparison.
Recently, BTC yields have been showing a rapid upward trend. Just four weeks ago, MicroStrategy announced in a press release that "year-to-date BTC yields have reached 26.4%", a significant increase from 17.8% on September 30.
When MicroStrategy first included BTC yield as a key performance indicator, the company ambitiously stated that they would strive to increase this indicator to a range of 4% to 8% from next year.
What is the Nasdaq 100 Index?
According to the official introduction, the Nasdaq 100 Index is composed of the 100 largest non-financial companies listed on the Nasdaq Stock Market. Its history dates back to January 1985 - nearly 40 years ago - when it was launched together with the Nasdaq Financial 100™ Index, which is composed of the 100 largest financial stocks listed on the Nasdaq. These indices are benchmarks for financial products such as options, futures and funds. The Nasdaq 100 is rebalanced every December, and Friday coincides with the expiration date of the quarter's stock index futures, stock index options, stock options, and individual stock futures. (Quadruple Witching Expiration)
The Nasdaq-100 Index is the basis for the Invesco QQQ Trust (Nasdaq: QQQ), which seeks to provide investment results consistent with the performance of the Nasdaq-100 Index (before fees). In addition, options, futures and structured products based on the Nasdaq-100 Index and the Invesco QQQ Trust are traded on multiple exchanges.
Joy
