By Medha Singh
(Reuters) -MicroStrategy (MSTR) shares rose 6% in premarket trading on Monday as the software company and bitcoin buyer joined the tech-heavy Nasdaq 100 index, which could further strengthen plus the rebound in stocks.
The $25.7 trillion index that houses the largest non-financial companies will now gain indirect exposure to bitcoin through MicroStrategy, which has $44 billion worth of digital currency on its balance sheet, about 2% of the total supply of the largest cryptocurrency in the world.
The prospect of more buying by funds tracking the Nasdaq 100 could further boost MicroStrategy shares, which have risen nearly 550% this year along with a jump in the price of bitcoin.
The company has more than doubled its bitcoin holdings this year through equity and debt deals.
It could be “the beginning of a capital cycle that could potentially drive up the BTC spot price,” said Matthew Dibb, chief investment officer at cryptocurrency asset manager Astronaut Capital.
“ETFs like QQQ and many others would purchase MicroStrategy to mirror the index holdings, which would drive the price up and in turn allow 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 rose to an all-time high above $106,000 on Monday after President-elect Donald Trump suggested he plans to create a strategic reserve of bitcoin in the United States similar to its strategic oil reserve.
MicroStrategy shares have gained 3,200% since adopting bitcoin as a 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 has risen to more than $100 billion based on the latest premarket share price, more than doubling the value of its bitcoin reserves.
“In the long term, this is a huge milestone for cryptocurrencies and we are bound to listen to the voices, both bullish and bearish, that will become much louder talking about MicroStrategy and Saylor in the coming months,” Dibb said.
Other Nasdaq 100 entrants include Palantir and Axon Enterprise, Nasdaq said late Friday, replacing Illumina, Super Micro and Moderna. The reconstituted index will begin trading on December 23.
Super Micro shares fell 10.6%, while Palantir rose 2.1%.
(Reporting by Medha Singh in Bengaluru, Editing by Louise Heavens and Shounak Dasgupta)