Strategy Inc. eyes S&P 500 entry with $14B Bitcoin gain, potentially triggering $16B index fund buy-in and Wall Street shift.
Strategy Inc., once known as MicroStrategy, has hit a major milestone. The company reported a $14 billion unrealized gain last quarter, meeting the S&P 500’s profitability requirements. According to Bloomberg, this profit is due to its huge stockpiles of Bitcoin, currently worth approximately 70 billion.
S&P 500 Entry Could Force Index Funds to Buy 50M Strategy Shares
Passive index funds would be required to purchase approximately 50 million shares in case Strategy is offered in the S&P 500. That amounts to about 16 billion at present prices. This would provide institutional investors such as pension funds with an indirect investment in Bitcoin via a Strategy stock.
The float-adjusted liquidity of the company is the best of 26 candidates in the current rebalance cycle of the S&P 500. This is because its stock is actively traded, and big investors can easily acquire and sell it. A major criterion of the S&P 500 committee in selecting new members is high liquidity. Strategy has a market capitalization of 90 billion, too. This is a bigger valuation than most companies already in the S&P 500 and, therefore, is very likely to be included.
Related Reading: Investors Drop Lawsuit Against Strategy and Michael Saylor Over Bitcoin Risks | Live Bitcoin News
But it is not a sure entry into the S&P 500. The committee does not only look at financial numbers. They take sector balance as an example. Most tech companies already have a presence in the S&P 500, and the Bitcoin-focused model provided by Strategy could be considered overly risky. Its 30 interval variations reached 96, greater than Nvidia and Tesla of 77 and 74, respectively. This instability may be of concern to the committee, which would want the index to remain stable.
Further, the business model of Strategy makes it even more difficult. Under the leadership of Michael Saylor, the company has abandoned enterprise software in favor of a Bitcoin-oriented treasury approach. It raises funds through debt and equity to purchase additional Bitcoin. Although this strategy has led to massive profits, not all investors are convinced that it is sustainable.
Strategy Inc. S&P 500 Inclusion Could Legitimize Bitcoin on Wall Street
For instance, Strategy’s stock fell 17% in August after a preferred stock sale disappointed investors. Critics such as short-seller Jim Chanos say the model is risky should Bitcoin prices fall. However, the institutional interest in Saylor’s strategy has been growing, as the stock has increased 3,300% since 2020.
However, being added to the S&P 500 may be a game-changer. The index effect tends to raise the stock price of a company when it enters the index. Studies indicate that new S&P 500 participants are likely to improve, but this is less rapid this time around as traders attempt to foresee additions. Strategy could lead to accelerated investment with almost 10 trillion of passive funds tracking the S&P 500. This would legitimize the vision of Saylor and would make Bitcoin more mainstream.
Finally, Strategy Inc. has passed the financial criteria of the S&P 500, though there are areas where it is problematic. Its extreme volatility and particular Bitcoin policy may cause some concerns. It is, however, a serious competitor because of its good liquidity and market cap. The ruling on whether or not it will happen by September 5, 2025, may change how Wall Street approaches crypto.
