Strategy’s Bitcoin Bet Boosts S&P 500 Hopes With 91% Chance

Michael Saylor’s Strategy, a company heavily invested in Bitcoin, is on the verge of achieving an unprecedented milestone: inclusion in the S&P 500. According to financial analyst Jeff Walton, there is a 91% chance that the firm will qualify by the end of the second quarter, provided that Bitcoin maintains a price above $95,240. This threshold is crucial because S&P 500 entry requires companies to demonstrate positive earnings over the last four quarters. Strategy has posted losses in the last three quarters, but under new accounting rules, the firm now marks its Bitcoin at market value. If Bitcoin remains high, Strategy’s second-quarter earnings could turn positive, making the company eligible for inclusion in the index.

Bitcoin’s current trading price of $106,200 offers some breathing room, but the margin is slim. Walton’s analysis indicates that since 2014, Bitcoin has dropped more than 10% over a six-day span only 8.7% of the time. This suggests a strong statistical likelihood that the price will remain above $95,000 by the June 30 deadline. Each day that passes without a significant drop in Bitcoin’s price increases Strategy’s odds of qualifying for the S&P 500. For instance, with five days left, there is a 92.4% chance that Bitcoin will not drop 10%, increasing to 97.6% with just one day remaining. If Bitcoin holds steady, Strategy’s quarterly earnings will turn green, paving the way for its inclusion in the S&P 500.

If Strategy is added to the S&P 500, it would be the second crypto-related company to join the index this year, following Coinbase’s addition in May. This development is seen as a significant step toward the legitimacy of the entire crypto asset class. It would also mark Strategy’s second major index addition, after its entry into the Nasdaq-100 in December 2024. However, a sudden drop in Bitcoin’s price, potentially triggered by geopolitical tensions or macroeconomic shocks, could derail these plans. Last weekend, fears surrounding the Iran-Israel conflict caused Bitcoin to fall below $100,000 for the first time since May. If Bitcoin closes below $95,240 by June 30, Strategy’s second-quarter earnings would not be sufficient to qualify for the S&P 500, pushing its eligibility back at least another quarter.

Strategy’s stock has long been viewed as a high-volatility proxy for Bitcoin, and investors have responded positively. The firm holds over 592,000 BTC, more than any other public company. Inclusion in the S&P 500 could attract an influx of institutional money, as index funds would be required to purchase MSTR shares. This added credibility could give Strategy’s shares a premium beyond just Bitcoin’s price. However, it also places the company more squarely in Wall Street’s crosshairs, subjecting it to higher scrutiny, tighter reporting, and greater macroeconomic exposure, which may challenge Saylor’s vision of a Bitcoin treasury fortress.

Strategy, now rebranded from MicroStrategy, has garnered strong support from Wall Street analysts. According to the analyst's forecast, the stock holds a Strong Buy rating, with 12 out of 13 analysts recommending it as a Buy, and just one Sell rating. The average 12-month price target for MSTR is $524.92, implying a 39.2% upside from the recent close. This optimistic outlook reflects the potential benefits of S&P 500 inclusion, but also underscores the risks associated with Bitcoin’s volatility and the challenges of maintaining eligibility for the index.