The strategy, previously known as MicroStrategy, has built a reputation as the world’s largest corporate Bitcoin holder, but the company was removed from the S&P 500 during its latest rebalancing.
The decision surprised many in the crypto community who expected a company led by Michael Saylor to join America’s most valuable corporate class. In particular, the index included the Crypto Trading Platform Robinhood.
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Why did the strategy miss the S&P 500 inclusion?
The S&P Dow Jones index does not reveal why certain companies are excluded, but that standard requires companies to record positive revenue in the last four quarters, including the most recent quarter. The strategy’s financial records do not meet that bar.
Since pivoting to Bitcoin in 2020, the company’s results have been shaking sharply in response to the price of BTC.
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In the second quarter of this year, the strategy’s net profit exceeded $10 billion due to a rise in Bitcoin valuation. However, just a quarter ago, a BTC slump forced the company to record a net loss of $4.2 billion.
This inconsistency could have been factored into a decision to exclude stocks despite market capitalization and trading volume.
“MicroStrategy’s finances are controlled by Bitcoin Holdings’ unrealized profits/losses. Bitcoin Holdings brings revenues from large profits to large losses each quarter.”
In fact, the potential addition of a strategy to the S&P 500 carries weight beyond prestige. The index locks trillions of dollars into facility funds and ETFs.
The strategy currently owns 636,505 BTC in the Ministry of Corporate Treasury, can use that perception to attract more mainstream investors to emerging industries.
With this in mind, some crypto community members argue that the index should adapt to the new financial reality that Bitcoin represents.
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“The S&P 500 requires an MSTR. The MSTR does not require an S&P 500. Bitcoin deserves a spot on every retirement account,” said Jeff Walton, vice president of Bitcoin Strategy at Strive.
To support this, Saylor noted that the company’s stocks have almost double the return on Bitcoin itself. He added that it outweighs traditional assets such as the S&P 500.
Meanwhile, the next opportunity for inclusion will take place in December when S&P announces a new quarter adjustment.
Until then, strategy exclusion highlights tensions between traditional financial metrics and the instability but growing impact of digital assets.
