MicroStrategy's inclusion in the S&P 500 index could lead to millions of passive Bitcoin buys?

As the price of Bitcoin continues to rise, MicroStrategy has been consistently investing in and holding 190,000 bitcoins over the past few years, with the value nearing the $10 billion mark. MicroStrategy's stock price has surged, ranking it 545th among the largest publicly traded companies in the United States. There is even discussion about the possibility of MicroStrategy being included in the S&P 500 index in the near future! Once included in the S&P 500 index, Bitcoin will begin to "automatically seep into all portfolios," including those of traditional 401k plans, retirement funds, and the hands of many passive investors.

Bitcoin surpasses $52,000, MicroStrategy's Bitcoin holdings approach $10 billion in value

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, making it one of the most representative indices of the U.S. stock market. The index uses a market capitalization-weighted methodology, where the weight of each component stock is proportional to its market value.

For a stock to be included in the S&P 500 Index, it must meet the following criteria:

• Headquartered in the United States
• Market capitalization of $15.8 billion or more
• The sum of the company's profits in the last four quarters and the profit in the most recent quarter are positive
• Stock trades actively, high liquidity, and a significant portion of shares are held by the public

The components of the S&P 500 Index are adjusted quarterly by the Index Committee under S&P. The Committee reviews the component stocks based on the above criteria for additions or deletions.

MicroStrategy has a chance to meet the requirements with another 30% increase

As per current regulations, a candidate company must have a market capitalization of $15.8 billion to qualify. MicroStrategy's current market cap is $11.8 billion, meaning that if all other conditions remain the same, its price would need to rise from the current $698 to $937, requiring an increase of over 30%.

Entering the S&P 500 brings in billions of dollars in capital inflows

Currently, the three largest ETFs tracking the S&P 500 Index include:

• SPY SPDR S&P 500 ETF Trust: Assets under management $458.4 billion
• IVV iShares Core S&P 500 by BlackRock: Assets under management $435.1 billion
• VOO Vanguard S&P 500 ETF: Assets under management $405.8 billion

Just these three ETFs have a total market value of $1.3 trillion. Even with the lowest weight of 0.01%, this can still result in $130 million of capital inflow. Furthermore, the Bitcoin held by MicroStrategy will indirectly flow into traditional 401k plans, retirement funds, and the hands of many passive investors.