Bitcoin proxy MicroStrategy to join Nasdaq 100 and heavily traded ‘QQQ’ ETF

Micro strategythe favorite high beta bet on the price of bitcoin, will participate Nasdaq 100 index, a move that could further boost demand for the controversial stock, which has been on a torrid run this year along with the price of the cryptocurrency.

The Nasdaq 100 includes 100 of the largest non-financial companies in the technology-focused Nasdaq Composite Index. A share’s addition means that ETFs – including the very popular ones Invesco QQQ Trustwhich has $325 billion in assets — will also become automatic buyers.

Shares of the bitcoin proxy could be set to gain from the move. They are more than sixfold this year compared to bitcoins an increase of almost 140% over the same period.

The change, which will take effect before the market opens on December 23, was announced on Friday after the stock market closed. MicroStrategy was widely telegraphed as a potential candidate for membership by investors looking forward to the index’s rebalancing this week.

“This would lead to the inclusion of MSTR in some of the largest ETFs such as QQQ (5th largest ETF) etc, leading to one-time fresh buying…and ongoing participation in future inflows,” Gautam Chhugani said , analyst at Bernstein, in a note this week ahead of the switch.

Additionally, “the market is likely to set its sights on S&P 500 inclusion for 2025,” Chhugani said. “Due to the profitability of the software business, it may currently be a challenge to be considered for S&P 500 inclusion.”

Nasdaq changes the constitution of the Nasdaq 100 index annually. The companies selected for inclusion are largely based on market capitalizations on the last trading day of November, which was November 29 this year. Shares must also meet eligibility requirements around liquidity and the free float percentage of their shares.

MicroStrategy originally sold enterprise software, but the firm has increasingly become a bitcoin holding company. It first added bitcoin to its balance sheet in 2020, with Michael Saylor as CEO at the time, and has leaned into that strategy in the years since. MicroStrategy is now issuing convertible notes to leverage its purchases, and the stock’s daily trading sometimes resembles a more volatile version of bitcoin.

The company now has a market capitalization of about $90 billion, despite having less than $500 million in revenue in the previous four quarters, according to FactSet. Saylor told CNBC’s “Squawk Box” earlier this month that he sees the company’s role as “securitizing bitcoin.”

“Primarily, our job is to bridge the traditional capital markets that want bonds, or they want fixed income, or they want stocks, or they want options, and we put that into the crypto economy. And we use bitcoin as tool to do that,” said Saylor, who is now the company’s executive chairman.

MicroStrategy began ramping up its purchases after the US presidential election. The victory of President-elect Donald Trump – specifically his promise to establish a national strategic bitcoin repository – has driven bitcoin to new record highs, achieved in part by the company’s purchases. MicroStrategy now owns 423,650 bitcoins. It bought 149,880 of them in four separate purchases over the past month, beginning Nov. 11.

As part of MicroStrategy’s hot streak this year, activists have pushed bitcoin investment as an agenda item at shareholder meetings at companies like Microsoft and Amazon. Mining stocks such as Mara Holdings have also begun to adopt Saylor’s bitcoin dividend strategy.

Palantir Technologies and Axon Enterprise will also join the Nasdaq 100 later this month. Illumina, Modern and Super micro computer will be removed from the index.

Last year, the Nasdaq 100 added six companies in its annual reconstitution, including DoorDash. Five of those six stocks rose on Monday after the announcement, with an average move of 1.21%.

—With reporting by Jesse Pound.