MicroStrategy's Bitcoin Bet Takes Center Stage Ahead Of Nasdaq 100 Inclusion

Bitcoin continued its strong show after crossing the $107,000-mark on multiple positive triggers. The largest cryptocurrency was trading around $106,679.52 on Tuesday, after cooling off slightly from the record level.

While these gains have sparked excitement in the crypto space, one company’s embrace of Bitcoin is making waves across both financial and technological markets: MicroStrategy. The tech firm, once primarily known for its business intelligence software, has transformed into the largest Bitcoin holder among publicly traded companies, amassing 439,000 Bitcoins, currently valued at around $47 billion.

Bitcoin has gained over 16.10% in over a month, nearly 58.77% since the US presidential election, and a staggering 154% in last 12 months.

The optimism surrounding Bitcoin is also fuelled by expectations of a more crypto-friendly regulatory environment under the incoming administration of President-elect Donald Trump. Additionally, the potential establishment of a national strategic Bitcoin reserve has added to positive market speculation.

"We're gonna do something great with crypto because we don't want China, or anybody else but others are embracing it, and we want to be ahead," Trump said in a recent interaction with CNBC.

MicroStrategy’s deep bet on Bitcoin began in August 2020 when the company shifted its treasury strategy, opting to use Bitcoin as its primary reserve asset. Since then, the company’s stock has experienced extraordinary growth, from a market capitalisation of about $1.1 billion in 2020 to nearly $100 billion today.

This dramatic increase in stock value has been propelled largely by the rising price of Bitcoin, which has boosted investor sentiment around the company. In fact, MicroStrategy’s stock has surged by 614% in one year, outpacing the S&P 500’s 28.13% rise.

In a major milestone for both the company and the crypto world, MicroStrategy is set to be included in the Nasdaq 100 by Dec. 23, 2024. This development has significant implications for both the company's stock and Bitcoin itself.

The Nasdaq 100 is a technology-heavy index that includes 100 of the largest non-financial companies listed on the Nasdaq stock exchange, many of which are leaders in innovation and technology. About 55% of the index is tech-focused, with companies driving advancements in sectors such as AI, software, and digital transformation.

MicroStrategy's entry into this index will inevitably give its Bitcoin holdings greater exposure. The inclusion means that many exchange-traded funds and institutional investors that track the Nasdaq 100 will now gain indirect exposure to Bitcoin through their investments in MicroStrategy. For many, this could be their first exposure to Bitcoin, as funds often track major indices like the Nasdaq 100 to build diversified portfolios.

This inclusion could further attract capital to MicroStrategy, reinforcing its Bitcoin acquisition strategy. The more institutional investors that gain exposure to the company, the greater the likelihood that MicroStrategy will continue to grow its Bitcoin holdings. The company has shown no signs of slowing down. As of Dec. 16, 2024, MicroStrategy had acquired an additional 15,350 Bitcoins for approximately $1.5 billion, bringing its total holdings to 439,000 Bitcoins. These Bitcoins were acquired at an average price of approximately $100,386 each.

Why does MicroStrategy’s entry into the Nasdaq 100 matter for Bitcoin? The answer lies in the increased legitimacy and mainstream acceptance of the cryptocurrency. By being added to one of the most widely followed indices in the world, Bitcoin itself gains further validation as a store of value.

The link between MicroStrategy and Bitcoin is undeniable; the company’s fortune is tightly intertwined with the price movements of the cryptocurrency. As institutional investors gain exposure to MicroStrategy through Nasdaq 100 tracking funds, there will likely be an uptick in interest in Bitcoin as well.

This inclusion will lead to Bitcoin being more trusted than other cryptos, said Kunal Sodhani, vice president, global trading center, Shinhan Bank.

Furthermore, the addition of MicroStrategy to the Nasdaq 100 could drive more widespread adoption of Bitcoin. As traditional financial institutions continue to explore ways to incorporate digital assets into their portfolios, the inclusion of a Bitcoin-heavy company in the Nasdaq 100 may encourage other publicly traded companies to take similar steps.

MicroStrategy views Bitcoin as the ultimate store of digital capital. As the world’s first and largest Bitcoin Treasury company, MicroStrategy has amassed its Bitcoin holdings using proceeds from equity and debt financing, as well as cash flows from its business operations.

The company's public commitment to Bitcoin has garnered attention from both tech enthusiasts and financial markets, positioning it as a bridge between traditional business intelligence and the rapidly growing digital asset space.

In addition to its Bitcoin holdings, MicroStrategy also provides AI-powered analytics software.