How MicroStrategy Might Achieve Inclusion in the S&P 500 Index by 2025

This is not investment advice. The author does not hold any shares in the stocks discussed.

MicroStrategy’s Bitcoin Accumulation: A Closer Look

MicroStrategy (MSTR) has garnered significant attention as a high-risk investment linked to Bitcoin—one of the most volatile assets available. Investors and analysts are currently focused on the firm’s growing Bitcoin reserves, leading to a phenomenon where the company’s BTC acquisitions influence the cryptocurrency’s market price.

MicroStrategy has acquired 15,350 BTC for ~$1.5 billion at ~$100,386 per #bitcoin and has achieved BTC Yield of 46.4% QTD and 72.4% YTD. As of 12/15/2024, we hodl 439,000 $BTC acquired for ~$27.1 billion at ~$61,725 per bitcoin. $MSTR https://t.co/SaWLNBVkrl

— Michael Saylor⚡️ (@saylor) December 16, 2024

Recent Bitcoin Acquisition and Impact

In a move that aligns with their trend of expanding Bitcoin holdings, MicroStrategy recently announced an additional investment of approximately $1.5 billion to acquire 15,350 BTC. This acquisition brings their total to an impressive 439,000 BTC.

Potential Milestones Ahead

The company’s expanding Bitcoin reserve coincides with a bullish trend in the overall cryptocurrency market, raising the possibility of significant financial advancements in 2025. This optimism is fueled by a recent change in accounting standards advocated by the FASB.

The recent Accounting Standards Update (ASU) 23-08 takes effect as of December 15, 2024. It mandates that companies holding cryptocurrency must assess the fair market value of these assets during each reporting period. Consequently, any increases in value will directly influence the company’s net income.

BREAKING: Bitcoin hits $107,000, a new all time high.

— unusual_whales (@unusual_whales) December 16, 2024

Bitcoin Surges to New Highs

As this article is being prepared, Bitcoin has reached a remarkable all-time high of $107,000, a surge sparked by anticipations that President-elect Trump may implement a strategic Bitcoin reserve on his first day in office.

Additional factors contributing to this bullish trend include BlackRock’s recent advice endorsing a 1 to 2 percent allocation to Bitcoin within multi-asset portfolios. Given the current global reserve asset valuation of around $900 trillion, a 2 percent allocation could dramatically elevate Bitcoin’s market price to as high as $900,000.

The only requirement left for $MSTR to enter the S&P 500 is to have positive earnings over the SUM of the previous 4 quarters.

On a theoretical basis, once FASB is implemented in Q1 2025, and with a $BTC price of $120,000 and no increase to their $BTC holdings, $MSTR will have… pic.twitter.com/4LJUCweADU

— James Van Straten (@btcjvs) December 15, 2024

Prospects for S&P 500 Inclusion

For MicroStrategy to gain entry into the S&P 500 index, it must present positive earnings on a cumulative basis over the previous four quarters. Currently, the company has yet to fulfill this crucial criterion.

Nevertheless, with the enforcement of ASU 23-08 and the potential for Bitcoin prices to rise further, MicroStrategy is poised to potentially report a net income of $25 billion by Q1 2025, assuming an average Bitcoin valuation of $120,000 and without any major acquisitions of BTC. This outcome could enable its inclusion in the esteemed S&P 500 index.

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