S&P 500 Spurns Bitcoin Proxy MicroStrategy Amid Volatility Concerns

MicroStrategy (MSTR), now rebranded as "Strategy," was excluded from the S&P 500 index during the September 2025 rebalancing, despite meeting key financial and operational criteria such as market capitalization, liquidity, and positive earnings. The company reported record net income of $10 billion and operating income of $14 billion in Q2 2025, driven by new fair-value accounting rules for its Bitcoin holdings. With a market cap of $95.95 billion and a public float exceeding 50%, MicroStrategy appeared to qualify for inclusion. However, the S&P Dow Jones Indices committee opted for other firms like Robinhood and AppLovin Corp., citing discretionary criteria that prioritize financial stability and diversified business modelsStrategy’s Exclusion From The S&P 500 in September 2025 Has Several Implications^[1].

The exclusion is attributed to MicroStrategy’s reliance on Bitcoin’s price fluctuations, which constitute 636,505 BTC (worth ~$70 billion) on its balance sheet. Analysts, including Vincent Van Code, argue that the company’s earnings are volatile due to unrealized gains and losses tied to Bitcoin’s market value, diverging from the S&P 500’s preference for stable, diversified revenue streamsStrategy’s Exclusion From The S&P 500 in September 2025 Has Several Implications^[1]. JPMorgan strategists highlighted that the decision signals caution toward including entities effectively acting as “Bitcoin funds,” potentially deterring other index providers from adding crypto-focused companies to their indicesS&P 500's Rejection of the Company Formerly Called MicroStrategy May Stop the Crypto-Acquisition Frenzy^[2].

The exclusion has immediate financial implications for MicroStrategy. The company forgoes an estimated $10–16 billion in passive fund inflows that typically accompany S&P 500 inclusion. Analysts note that index-linked buying could have stabilized the stock price, reducing volatility tied to Bitcoin’s movements. Instead, the stock dropped ~2% in after-hours trading following the announcementStrategy’s Exclusion From The S&P 500 in September 2025 Has Several Implications^[1]. The decision also limits Bitcoin’s mainstream validation, as inclusion could have signaled broader institutional acceptance and boosted demand for the cryptocurrencyStrategy’s Exclusion From The S&P 500 in September 2025 Has Several Implications^[1].

While firms like Coinbase and Block Inc. have been added to the S&P 500, MicroStrategy’s unique structure as a Bitcoin proxy remains contentious. The committee’s emphasis on sectoral balance and diversified operations suggests that crypto-related businesses with significant exposure to volatile assets face heightened scrutiny. JPMorgan warned that other indexes may reconsider their inclusion of corporate Bitcoin treasuries, such as those held by EightCo and CaliberCos, which recently saw sharp price swings following crypto purchase announcementsS&P 500's Rejection of the Company Formerly Called MicroStrategy May Stop the Crypto-Acquisition Frenzy^[2].

Long-term implications for MicroStrategy hinge on its ability to diversify beyond Bitcoin. The company’s current strategy, which includes acquiring Bitcoin as a corporate treasury asset, contrasts with the S&P 500’s focus on traditional revenue-generating businesses. Analysts suggest that demonstrating consistent profitability or expanding its software operations could improve future eligibility. However, the exclusion underscores the index’s conservative stance on crypto-driven models, even as institutional Bitcoin adoption growsStrategy’s Exclusion From The S&P 500 in September 2025 Has Several Implications^[1].

The decision has mixed market reactions. Short-term investors and crypto enthusiasts view the exclusion as a setback, potentially increasing stock volatility and dampening Bitcoin’s broader adoption. Conversely, long-term Bitcoin proponents remain unfazed, citing MicroStrategy’s commitment to its strategy. The broader crypto market, however, faces tempered enthusiasm, as the S&P 500’s reluctance to fully embrace Bitcoin-based models may slow mainstream integrationStrategy’s Exclusion From The S&P 500 in September 2025 Has Several Implications^[1].