By Medha Singh
(Reuters) -MicroStrategy shares rose 6% in premarket trading on Monday as the software company and bitcoin buyer was set to join the tech-heavy Nasdaq 100 index that could further strengthen a rally in the stock.
The $25.7 trillion index that houses the largest non-financial companies will now gain 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 world’s largest cryptocurrency.
The prospect of more buying from funds that track the Nasdaq 100 could further boost MicroStrategy’s stock that has surged nearly 550% this year alongside a jump in bitcoin price.
The company has more than doubled its bitcoin holdings this year through equity and debt deals.
It could be “the start of a looping cycle of capital that could potentially drive up the spot BTC price,” said Matthew Dibb, chief investment officer at cryptocurrency asset manager Astronaut Capital.
“ETFs such as QQQ and many others would buy MicroStrategy to mirror holdings of the index, therefore driving up the price, and in turn, allowing MicroStrategy to purchase more BTC through debt, bond and equity offerings.”
The largest exchange-traded fund tracking the Nasdaq-100 is the $322 billion Invesco QQQ Trust, according to Morningstar.
Bitcoin surged to a record high above $106,000 on Monday after President-elect Donald Trump suggested he plans to create a U.S. bitcoin strategic reserve similar to its strategic oil reserve.
MicroStrategy’s shares have gained 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 ended Sept. 20, its third consecutive quarterly loss.
The company’s market capitalization rose to more than $100 billion based on the latest premarket share price, more than twice the value of its bitcoin stockpile.
“Longer term this is a huge milestone for crypto and we are bound to hear the voices, both bulls and bears, get a lot louder talking about MicroStrategy and Saylor in the months to come,” Dibb said.
Other entrants to the Nasdaq 100 include Palantir and Axon Enterprise, Nasdaq said late on Friday, replacing Illumina, Super Micro and Moderna. The reconstituted index will begin trading on Dec. 23.
Super Micro shares tumbled 10.6%, while Palantir rose 2.1%.
(Reporting by Medha Singh in Bengaluru, Editing by Louise Heavens and Shounak Dasgupta)
