Bitcoin’s Q1 performance is set to determine the eligibility of Strategy (MSTR) for inclusion in the S&P 500 index as early as June 20. A close above $96,337 for bitcoin during Q1 could enable MSTR to qualify for S&P 500 inclusion.
Strategy Could Be Eligible for S&P 500 Inclusion in June if Bitcoin Closes Q1 Above $96K
The last hurdle for MSTR to qualify for the S&P 500 is to achieve positive GAAP net income over the trailing 12 months.
The S&P 500, also known as the Standard & Poor's 500, is a stock market index that represents the market value of 500 large, publicly traded companies in the United States.
It is considered one of the leading indicators of the overall health of the US stock market and economy.
The S&P 500 is widely followed by investors and financial analysts as it provides a snapshot of the performance of the largest and most influential companies in the country.
What to know:
A close above this threshold could enable ‘Strategy (MSTR) to qualify for S&P 500 inclusion as early as June 20, provided Q1 2025 earnings are strong enough to offset prior bitcoin-driven losses.’ For that, bitcoin would need a Q1 closing price above the company’s average purchase price of $96,337 during those three months.
Bitcoin is a decentralized digital currency that allows for peer-to-peer transactions without the need for intermediaries.
Created in 2009 by an anonymous individual or group using the pseudonym Satoshi Nakamoto, Bitcoin uses cryptography to secure and verify transactions.
It operates on a decentralized network of computers, known as nodes, that work together to record and verify transactions on a public ledger called the blockchain.
A close below that level would force MSTR to book losses, perhaps impeding S&P inclusion. Currently, the company meets all eligibility requirements except one: achieving positive GAAP net income over the trailing 12 months (the most recent four quarters combined). To qualify, Q1 2025 earnings must be high enough to offset losses from the previous three quarters—a goal that could be achieved thanks to the adoption of the ‘Financial Accounting Standards Board (FASB) digital asset accounting rule.’
The Financial Accounting Standards Board (FASB) is an independent, non-profit organization responsible for setting 'financial accounting and reporting standards' in the United States.
Established in 1973, FASB replaced the Accounting Principles Board (APB) to provide a more objective and transparent standard-setting process.
The board issues Accounting Standards Codification (ASC), which consolidates and updates existing standards into a single framework.
FASB's primary goal is to promote 'financial reporting consistency' and transparency, enabling investors and other stakeholders to make informed decisions.
The FASB rule change requires companies to recognize bitcoin holdings at fair value, meaning price gains will flow through to the bottom line (as would price declines). Prior to this rule, corporate digital asset holders were required to account for holdings at their weakest levels. MSTR, for example, in the fourth quarter of 2024 still valued its bitcoin at less than $16,000 per token, leading to a $1 billion impairment loss even as bitcoin closed the year at about $94,000.
According to an analysis by ‘Richard Hass on X,’ assuming MSTR holdings don’t change between now and March 31, bitcoin must close the first quarter above $96,337 for the company to meet the positive trailing 12-month earnings requirement. “Based on Q4 2024 earnings of -$671 million in net income MSTR requires $1.113B in Q1 2025 earnings to produce positive earnings in the prior four quarters and become eligible for S&P 500,’ he wrote. ‘Based on MSTR’s current treasury of 478,740 BTC, the required BTC price on March 31 to achieve this is $96,337”.
If bitcoin prices remain strong and MSTR continues accumulating tokens, S&P 500 inclusion is within reach. Said Benchmark analyst Mark Palmer: “MSTR’s adoption of the amended FASB guidance strengthens its case for S&P 500 inclusion. Given its outperformance of every current index constituent over four years, exclusion would be surprising.”
“While joining the Nasdaq-100 was significant, the S&P 500 is the holy grail,’ continued Palmer._’ Inclusion would validate its Bitcoin strategy, as all S&P 500 index funds would hold MSTR shares, indirectly exposing investors to Bitcoin.”
