By Medha Singh
(Reuters) -MicroStrategy shares rose briefly on Monday before faltering to finish virtually unchanged after the software company and bitcoin stock manager was selected to join the tech heavy, further boosting the stock’s outlook.
The $25.7 trillion index that houses the largest non-financial companies will now gain indirect exposure to bitcoin through MicroStrategy, which has $44 billion worth of digital currencies on its balance sheet, about 2% of ‘s total supply the world’s largest cryptocurrency.
The prospect of buying more from funds that track the Nasdaq 100 could further boost MicroStrategy’s shares, which are up nearly 550% this year, alongside a jump in the bitcoin price.
The share price rose as much as 7% on Monday before running out and closing 0.042% lower
It could be “the start of a cycle of capital that could potentially push up the spot price of BTC,” said Matthew Dibb, chief investment officer at cryptocurrency asset manager Astronaut Capital.
“ETFs like QQQ and many others would buy MicroStrategy to mirror its holdings in the index, which would increase the price and in turn allow MicroStrategy to buy more BTC through debt, bond and equity offerings.”
The fifth-largest U.S. listed fund Invesco QQQ Trust trails the Nasdaq 100 and has $328 billion in assets under management, according to data analytics firm VettaFi.
rose to a record high above $107,000 on Monday after newly elected President Donald Trump suggested he planned to create a US bitcoin strategic reserve, similar to its strategic oil reserve.
MicroStrategy shares have risen 3,200% since adopting Bitcoin as a treasury in 2020 under the leadership of co-founder Michael Saylor.
The company has more than doubled its bitcoin holdings this year by offering convertible bonds and selling shares. It reported a net loss of $340 million in the three months ended September 20, its third straight quarterly loss.
“MicroStrategy’s bitcoin strategy is a long-term, high-conviction buy and hold strategy,” said Bernstein analyst Gautam Chhugani.
The company’s market capitalization rose to more than $100 billion as its stock price rose, more than twice the value of its bitcoin stock. At closing, it was valued at nearly $98 billion.
Bitcoin miner Riot Platforms (NASDAQ:) and some small biotech companies, including Enlivex Therapeutics (NASDAQ:) and Hoth Therapeutics (NASDAQ:) have also decided to allocate some of their money to Bitcoin.
“Long-term, this is a huge milestone for crypto and we will no doubt hear voices, both bulls and bears, talking much louder about MicroStrategy and Saylor in the coming months,” Dibb said.
Short sellers, or investors who bet on MicroStrategy’s stock, have lost a total of $9.7 billion since the start of the year.
Other participants in the Nasdaq 100 include Palantir (NASDAQ:) and Axon Enterprise (NASDAQ:), Nasdaq said late Friday, replacing Illumina (NASDAQ:), Super Micro and Modern (NASDAQ:). The reconstituted index will begin trading on December 23.
