Done by Medha Singh
(Reuters) - Shares of MicroStrategy rose nearly 4% in pre-market trading on Monday as the software company and bitcoin buyers were set to join the tech-heavy, further brightening the stock's prospects.
The $25.7 trillion index, which includes the largest non-financial companies, will now gain indirect exposure to bitcoin through MicroStrategy, which has $44 billion of the digital currency on its balance sheet, roughly the total supply of the world's largest cryptocurrency. is 2%.
The prospect of more buying from funds tracking the Nasdaq 100 could further boost MicroStrategy's stock, which has risen nearly 550% this year with bitcoin's price jump.
The company doubled its bitcoin holdings this year through equity and debt deals.
This "could be the start of a looping cycle of capital that could potentially boost the spot BTC price," said Matthew Dibb, chief investment officer at cryptocurrency asset manager Astronaut Capital.
"ETFs such as QQQ and many others will buy MicroStrategy to mirror the index's holdings, therefore driving up the price, and in turn, allow MicroStrategy to buy more BTC through debt, bond and equity offerings."
The fifth-largest U.S. exchange-traded fund Invesco QQQ Trust tracks the Nasdaq 100 and has $328 billion in assets under management, according to data analytics company WetaFi.
Bitcoin hit a record high above $106,000 on Monday after President-elect Donald Trump suggested he plans to create a US bitcoin strategic reserve similar to its strategic oil reserve.
Shares of MicroStrategy have risen 3,200% since adopting Bitcoin as its treasury asset in 2020 under the leadership of co-founder Michael Seiler. It posted a net loss of $340 million in the three months ended Sept. 20, its third straight quarterly loss.
The company's market capitalization exceeded $100 billion based on the latest pre-market share price, more than double the value of its bitcoin stockpile.
Bitcoin miner Riot Platforms (NASDAQ: ) and some smaller biotech firms including Enlivex Therapeutics (NASDAQ: ) and Hoth Therapeutics (NASDAQ: ) has also decided to allocate portions of its cash to Bitcoin.
"This is a huge milestone for crypto for the long term and we're bound to hear voices, both bulls and bears, talking very loudly about MicroStrategy and Celer in the coming months," Dib said.
Other entrants to the Nasdaq 100 include Palantir (NASDAQ: ) and Axon Enterprise (NASDAQ: ), Nasdaq said late Friday, Illumina (NASDAQ: ), Super Micro and modern (NASDAQ: ). The reconstituted index will start trading on December 23.
Super Micro shares fell 13.7%, while Exxon rose 2.2% on Monday.