Written by Medha Singh
(Reuters) – Shares of MicroStrategy rose 6% in pre-market trading on Monday, as the software company and bitcoin buyer were set to join the tech-heavy Nasdaq 100 index, which could fuel the stock’s rise.
The $25.7 trillion index of the largest non-financial companies will now get indirect exposure to bitcoin via MicroStrategy, which holds $44 billion worth of the digital currency on its balance sheet, about 2% of the total supply of the largest cryptocurrency in the world. the world.
The prospect of more buying from funds that track the Nasdaq 100 could boost MicroStrategy shares, which have risen nearly 550% this year along with a jump in the price of bitcoin.
The company doubled its Bitcoin holdings this year through equity and debt deals.
This could be “the beginning of a recurring cycle of capital that will potentially drive the spot price of bitcoin higher,” said Matthew Dibb, chief investment officer at crypto asset manager Astronaut Capital.
“ETFs like QQQ and many others will purchase MicroStrategy to mirror the index’s holdings, thus driving up the price, thus allowing MicroStrategy to purchase more BTC through debt, bond, and stock offerings.”
The largest exchange-traded fund tracking the Nasdaq 100 is the $322 billion Invesco QQQ Trust, according to Morningstar.
Bitcoin rose to a record high above $106,000 on Monday after President-elect Donald Trump indicated he plans to create a US strategic reserve of bitcoin similar to the Strategic Petroleum Reserve.
MicroStrategy shares are up 3,200% since adopting bitcoin as its treasury asset in 2020 under the leadership of co-founder Michael Saylor. It reported a net loss of $340 million in the three months ending September 20, its third consecutive quarterly loss.
The company’s market cap has risen to more than $100 billion based on its latest pre-market stock price, more than double the value of its Bitcoin stock.
“Longer term, this is a huge milestone for cryptocurrencies, and we are bound to hear the voices, both bulls and bears, will speak much louder for MicroStrategy and Saylor in the coming months,” Dib said.
Other participants in the Nasdaq 100 include Palantir and Exxon Enterprise, replacing Illumina, SuperMicro and Moderna, Nasdaq said late Friday. The reconstituted index will begin trading on December 23.
SuperMicro shares fell 10.6%, while Palantir shares rose 2.1%.
(Reporting by Medha Singh in Bengaluru; Editing by Louise Heavens and Shaunak Dasgupta)