MicroStrategy Faces 91% Chance of S&P 500 Inclusion if Bitcoin Holds Above $95,240

MicroStrategy, a publicly traded firm renowned for its substantial Bitcoin holdings, is on the verge of being included in the S&P 500 index. However, this inclusion is contingent on Bitcoin's price stability. Financial analyst Jeff Walton has predicted that MicroStrategy has a 91% chance of qualifying for the S&P 500, provided that Bitcoin's price does not fall more than 10% before June 30. At the time of Walton's analysis, Bitcoin was trading around $106,044.

Walton identified $95,240 as the critical threshold. If Bitcoin closes below this level, MicroStrategy may not meet the earnings eligibility criteria for the S&P 500. To be considered for inclusion, a company must report cumulative positive earnings across the past four quarters. MicroStrategy has posted losses in the last three quarters, making its Q2 earnings heavily dependent on Bitcoin's fair market value. The company currently holds 592,345 BTC, and its financial performance is intricately linked to the crypto asset's price movements.

Recent volatility has added to the stakes. Over the weekend, Bitcoin dipped below $100,000 due to geopolitical tensions, briefly threatening MicroStrategy's position. However, prices have since rebounded, with Bitcoin trading near $106,200 as of Wednesday. MicroStrategy adopted new accounting standards at the start of 2024, allowing unrealized gains and losses on its Bitcoin holdings to be reflected in net income. This change significantly impacts its financial statements and S&P 500 eligibility.

Walton's forecast is based on historical Bitcoin price behavior. Since September 2014, in over 3,900 six-day periods, Bitcoin fell more than 10% just 343 times, or roughly 8.7% of the time. The longer Bitcoin goes without a significant drop, the lower the odds of such a decline. For instance, the odds of a 10% fall shrink to 4.2% if only two days remain in the quarter. If successful, MicroStrategy would become the second crypto-related company to join the S&P 500 in 2025, following Coinbase’s inclusion in May. In December 2024, MicroStrategy was added to the Nasdaq-100, joining the ranks of tech giants.

In May, Walton suggested that MicroStrategy could one day rise to become the top publicly traded company in the world. He believes the company's unprecedented exposure to Bitcoin gives it a unique edge. "MicroStrategy holds more of the best asset and most pristine collateral on the planet than any other company, by multiples," he said. MicroStrategy plans to raise as much as $2.1 billion through the sale of its 10% Series A Perpetual Strife Preferred Stock. The capital raise follows a similar structure to MicroStrategy’s previous fundraising rounds, many of which directly funded large-scale Bitcoin purchases.