As a levered bet on Bitcoin, which itself is one of the most volatile assets to ever exist, MicroStrategy (MSTR) shares are in the limelight these days, with investors and analysts alike honing in on the company's ever-increasing BTC holdings, which then serve to precipitate a circular "tail wags the dog" effect on the price of the world's preeminent cryptocurrency.
MicroStrategy has acquired 15,350 BTC for ~$1.5 billion at ~$100,386 per #bitcoin and has achieved BTC Yield of 46.4% QTD and 72.4% YTD. As of 12/15/2024, we hodl 439,000 $BTC acquired for ~$27.1 billion at ~$61,725 per bitcoin. $MSTR https://t.co/SaWLNBVkrl
— Michael Saylor⚡️ (@saylor) December 16, 2024
In what has, by now, become a fairly predictable pattern, MicroStrategy announced on Monday that it again increased its Bitcoin holdings last week, spending ~$1.5 billion to acquire 15,350 BTC, which increases the size of its total holdings to 439,000 BTC.
MicroStrategy's ever-increasing Bitcoin stash in an overall bullish crypto market could unlock a significant milestone for the company in 2025, courtesy of a recent accounting change spearheaded by the FASB.
To wit, the FASB's Accounting Standards Update (ASU) 23-08, which went into effect on the 15th of December 2024, posits that entities holding crypto assets must use the fair value (market-based) approach to revalue those assets for each reporting period, with the resulting gains and losses incorporated within the net income for the pertinent period.
This means that, in an environment where Bitcoin's price continues to increase in a consistent fashion, MicroStrategy is likely to record significant quarterly gains.
BREAKING: Bitcoin hits $107,000, a new all time high.
— unusual_whales (@unusual_whales) December 16, 2024
As of the time of writing, Bitcoin has notched another all-time high of $107,000, precipitated by expectations that President-elect Trump will approve a strategic Bitcoin reserve on his very first day in office.
Beyond these extrinsic factors, BlackRock recently recommended an optimal multi-asset portfolio allocation of between 1 and 2 percent to Bitcoin. For context, global reserve assets are currently valued at ~$900 trillion. A theoretical 2 percent allocation to Bitcoin can easily boost the cryptocurrency's price to $900,000.
The only requirement left for $MSTR to enter the S&P 500 is to have positive earnings over the SUM of the previous 4 quarters.
On a theoretical basis once FASB is implemented in Q1 2025 and with a $BTC price of $120,000 and no increase to their $BTC holdings, $MSTR will have… pic.twitter.com/4LJUCweADU
— James Van Straten (@btcjvs) December 15, 2024
This brings us to the crux of the matter. For MicroStrategy shares to qualify for an inclusion in the S&P 500 index, the company has to show positive earnings on a cumulative basis for a period that covers the previous 4 quarters. MSTR has yet to satisfy this significant requirement.
However, with ASU 23-08 in effect now, and paired with an environment where Bitcoin's price continues to increase, MicroStrategy can show a net income of $25 billion for Q1 2025, which should qualify it for the inclusion in the S&P 500 index, assuming an average Bitcoin price of $120,000 for the period and no additional significant BTC purchases.
Bear in mind that the high-flying stock has now been added to the Nasdaq 100 index, unlocking significant passive inflows.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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