Bitcoin promoters becoming Blue-Chip Stocks, can MicroStrategy make it into the S&P 500 index?

As the price of Bitcoin continues to rise, the pioneer of Bitcoin reserve strategy, MicroStrategy, holds 592,345 Bitcoins, valued at up to 63.8 billion USD. MicroStrategy's market capitalization has reached 106.2 billion USD, ranking it 93rd among the largest publicly traded companies in the United States. Recently, the S&P 500 is set to undergo quarterly adjustments; will MicroStrategy have a chance to be included this time? If it can enter the S&P 500 index, Bitcoin will begin to "automatically permeate all portfolios," including traditional 401k plans, retirement funds, and a large number of passive investors, giving MSTR stock price even more opportunity to rise.

What are the requirements to enter the S&P 500 index?

The S&P 500 Index is a stock market index compiled by Standard & Poor's, consisting of 500 large publicly traded companies in the United States. It is one of the most representative indices of the U.S. stock market. The index uses a market capitalization weighting method, meaning that the weight of each component stock is proportional to its market capitalization.

A stock must meet the following criteria to be included in the S&P 500 index:

Headquartered in the United States

market capitalization exceeds 18 billion dollars ( following market adjustment )

The sum of the profits for the company's last four quarters and the profit for the most recent quarter are positive.

Stock trading is active, liquidity is high, and most shares are held by the public.

The components of the S&P 500 index are adjusted once a quarter, and the review is conducted by the index committee under Standard & Poor's. The committee will increase or decrease the components based on the above conditions.

Bitcoin price remains above $95,240, with a success chance of 94.2%.

Strategy's current market capitalization has reached 106.2 billion USD, ranking it as the 93rd largest company by market capitalization in the United States, with active stock trading and high liquidity.

However, Strategy has recognized a digital asset loss of 5.91 billion USD in the first quarter due to the adoption of the new accounting system ASU 2023-08 this year. Calculated based on the Bitcoin price at the end of the quarter, which was 82,444 USD, this loss is the biggest obstacle to its entry into the index. Analyst Jeff Walton estimates that if the Bitcoin price closes above 95,240 USD by the end of June, it could bring significant paper gains, thus increasing its chances of entering the S&P 500. He estimates the success probability to be as high as 94.2%.

Entering the S&P 500 brings in at least hundreds of millions of dollars in capital inflow.

The three major ETFs tracking the S&P 500 index include:

SPY (SPDR S&P 500 ETF Trust): Asset size 611 billion USD

IVV ( BlackRock's iShares Core S&P 500): Asset size 566.9 billion USD

VOO ( Vanguard S&P 500 ETF ): Asset size 686.5 billion USD

The market capitalization of these three ETFs alone reaches 1.86 trillion USD. Even when calculated at the lowest weight of 0.01%, it can allocate 180 million USD in fund inflows. Meanwhile, the Bitcoin held by MicroStrategy will also indirectly flow into traditional 401k retirement funds and a large number of passive investors.

This article discusses whether Bitcoin advocates are becoming blue-chip stocks and if MicroStrategy can qualify for the S&P 500 index. Originally appeared in Chain News ABMedia.