On Monday evening Beijing time, the well-known "Bitcoin securitization concept stock" MicroStrategy rose nearly 6% in pre-market trading. After the closing of last Friday, Nasdaq released its annual index adjustment announcement, in which MicroStrategy was included in the Nasdaq 100 index.
This change will take effect before the opening on December 23rd (next Monday). This also means that a group of funds, including the fifth largest ETF in the world - the Jing Shun Nasdaq 100 Index (QQQ) with a scale of over $320 billion, must allocate to this stock before the end of this week. Global investors, including Chinese investors, will indirectly hold Bitcoin through ETF funds.
Industry pays attention to the logic of "Bitcoin rising flywheel"
It should be noted that buying MicroStrategy stocks solely from the perspective of "speculating on Bitcoin" is a very uneconomical behavior.
MicroStrategy had a market value of $97.9 billion at the close of last Friday, and has a chance to break through $100 billion after opening on Monday.
At the same time, including the nearly 150000 bitcoins that have been added in the past month, the listed company has a total of 423650 bitcoins in its hands. Calculated at a price of $100000 per unit, the total value will not exceed $50 billion. By reverse calculation, purchasing MicroStrategy is equivalent to buying Bitcoin for over $200000. Once the market hype enthusiasm has its ups and downs (which is common in the cryptocurrency industry), investors may suffer a greater decline than Bitcoin itself.
Before becoming a symbol of Bitcoin securitization, MicroStrategy was a company that sold enterprise software. According to statistics, the company's total revenue from selling software in the past four quarters was less than 500 million US dollars. In the previous fiscal quarter ending on September 20th, the company reported a loss of $340 million, marking the third consecutive quarter of losses.
Michael Thaler, the executive chairman of the company and the driving force behind the company's entry into the cryptocurrency industry, stated earlier this month that the company's role is to securitize Bitcoin. He said, "Our job is to build a bridge, hoping to combine traditional capital that buys stocks, bonds, or options with the crypto economy. Bitcoin is the tool to achieve this goal
With Trump winning the US election, his support for the cryptocurrency industry, and the concept of "Bitcoin National Reserve", "Bitcoin (US) Debt" and other concepts, the price of Bitcoin also jumped to a new high of $100000. Now, the market is also paying attention to MicroStrategy's push for Bitcoin's "upward flywheel" - like a "left foot stepping on the right foot" to rise.
(Bitcoin daily chart, source: TradingView）
Matthew Dibb, CEO of cryptocurrency asset management firm Astronaut Capital, stated that ETFs like QQQ will purchase MicroStrategy's stocks, and the rise in stock prices will enable listed companies to buy more Bitcoin through debt, bonds, and issuing new shares.
At the same time, the continuous rise in Bitcoin prices can also drive up MicroStrategy's stock price - and then buy more Bitcoin.
The residual shock wave of the ultrafine computer still exists
Since Thaler started pushing MicroStrategy to buy Bitcoin in 2020, the company's stock price has cumulatively risen more than 30 times, with a year to date increase of over 540%.
(MicroStrategy weekly chart, source: TradingView）
Nasdaq's inclusion of such a stock in an index tracked by global passive funds inevitably reminds people of another "index fund tragedy" of the year - the sharp decline of Supermicro computers after being included in the S&P 500 index.
After being included in the index in March this year, the company's market value has evaporated nearly $50 billion from its peak in March, leaving a market value of $21.3 billion at the end of last week.
(Super Micro Computer Daily Chart, Source: TradingView）
With MicroStrategy being included in the Nasdaq 100 index, Supermicro computers were also removed from this index. As of press time, the company has fallen more than 11% in pre-market trading, and its market value is likely to fall below the $20 billion mark tonight. Global investors and investors will continue to pay a real price for this setback.