MicroStrategy's Index Inclusion Risk and Its Implications for the Nasdaq 100

The Nasdaq 100, a bellwether for global technology markets, has long been criticized for its concentration in a handful of dominant stocks. As of December 2025, the index remains dominated by the so-called "Magnificent Seven," which collectively account for over 50% of its total weight. Yet, a new layer of complexity has emerged: the inclusion of crypto treasury companies like MicroStrategy (MSTR), whose business model hinges on Bitcoin holdings. This raises critical questions about index diversification, passive investing strategies, and the evolving regulatory landscape for digital assets.

MicroStrategy's Tenuous Hold on the Nasdaq 100

MicroStrategy, rebranded as "Strategy" in 2025, retains its position in the Nasdaq 100 despite persistent scrutiny. With a current weight of approximately 0.47%, it ranks as the 40th largest holding in the index. However, this inclusion is far from uncontroversial. Analysts have repeatedly flagged the company's reliance on Bitcoin-its balance sheet holds over 660,624 BTC-as a departure from traditional tech business models. Critics argue that MicroStrategy functions more like an investment fund than a software or services provider, a distinction that could jeopardize its index membership in future reconstitutions.

The Nasdaq 100's annual reconstitution in December 2025 reaffirmed MicroStrategy's inclusion, but the decision was not without tension. The index's reconstitution rules prioritize market capitalization and liquidity, metrics in which MicroStrategy still qualifies despite a 60% stock price decline over four months. However, MSCI has signaled it may reassess the inclusion of crypto treasury companies in early 2026. This uncertainty underscores the fragility of MicroStrategy's position and highlights the broader debate over whether indices should accommodate firms whose primary asset is a volatile digital currency.

Index Concentration and the Crypto Treasury Risk

The Nasdaq 100's concentration risks have been amplified by the rise of crypto treasury companies. As of November 2025, over 135 public companies hold Bitcoin in their corporate treasuries, with MicroStrategy's $115 billion in digital assets representing a significant portion of this trend. While these firms span sectors like technology, retail, and healthcare, their financial performance is increasingly tied to Bitcoin's price swings. For instance, Semler Scientific (SMLR) and Trump Media & Technology Group (DJT) have seen their stock prices plummet despite maintaining substantial Bitcoin reserves. This dynamic introduces a new form of systemic risk to the Nasdaq 100. The index's top 10 holdings already account for over 50% of its weight, with the "Magnificent Seven" dominating. Adding crypto treasury companies-whose valuations are inherently speculative-could further skew the index toward volatile assets. Passive investors are thus exposed to a dual risk of the concentration of traditional tech giants and the crypto-driven volatility of firms like MicroStrategy.

Regulatory Scrutiny and the Future of Crypto Treasuries

Regulatory clarity remains elusive for crypto treasury companies. Nasdaq introduced Rule 5712 in 2025 to govern digital asset-based investment interests, but the rule's application to public companies is still evolving. Meanwhile, Nasdaq Listing Rule 5635 now requires shareholder approval for issuing new shares to fund crypto purchases, adding procedural hurdles for firms pursuing Bitcoin-centric strategies. These developments suggest a cautious approach from regulators, who are balancing innovation with investor protection.

The potential exclusion of crypto treasury companies from major indices could have cascading effects. If MSCI or Nasdaq decides to remove firms like MicroStrategy, it could trigger a reevaluation of the entire crypto treasury model. This would not only impact the companies themselves but also ETFs and institutional investors that rely on index composition for passive strategies.

Implications for Passive Investing

The inclusion of crypto treasury companies in the Nasdaq 100 reflects a broader shift in passive investing. Institutional capital flows through index-tracking ETFs now indirectly fund Bitcoin holdings via firms like MicroStrategy. While this has boosted Bitcoin's legitimacy as a reserve asset, it also exposes investors to the risks of a highly concentrated and volatile market.

For passive investors, the key takeaway is the need for vigilance. The Nasdaq 100's current structure-already skewed toward a few tech giants-now incorporates a layer of crypto-driven volatility. This dual concentration could amplify market corrections, particularly if Bitcoin experiences another downturn. Investors must weigh the potential rewards of exposure to crypto treasury companies against the risks of overreliance on a single asset class.

Conclusion

MicroStrategy's inclusion in the Nasdaq 100 is a microcosm of the broader tension between innovation and risk in modern investing. While its presence reflects the growing acceptance of Bitcoin as a corporate asset, it also highlights the index's vulnerability to concentration and crypto volatility. As regulatory frameworks evolve and market conditions shift, investors must remain cognizant of the fragility of passive strategies in an era where digital assets increasingly shape traditional financial benchmarks.