Nasdaq investors set to gain bitcoin exposure

Good morning investors. We have a packed week with the Federal Reserve, Bank of Japan, and Bank of England all announcing interest rate decisions within 24 hours starting Wednesday.

More on that later. First, let’s talk MicroStrategy.

More Fed rate cuts are coming. You still have time to lock in a market-leading 7%* bond yield with Public.com.

Investors the world over are about to wake up with bitcoin in their portfolios.

Michael Saylor’s MicroStrategy —  the 35-year-old software company that’s staked its balance sheet and reputation on bitcoin — is set to join the Nasdaq 100 as part of the index’s annual reconstitution, according to an announcement Friday. 

The move, which takes effect December 23, marks another milestone for Saylor and his shareholders, who have enjoyed roughly a 500% return in 2024. 

That’s more than triple bitcoin’s year-to-date return of about 135%. 

The Nasdaq 100, which trades under the ticker QQQ, includes $325 billion in assets and is one of the most popular options for set-and-forget automatic investments. 

“Very few people realize that this moment is bitcoin entering the Nasdaq in the MSTR wrapper, similar to bitcoin entering the spot ETF market through a BlackRock wrapper in January,” investor Tim Kotzman, who hosts the Bitcoin Treasuries podcast, told me.

From the end of 2022 to 2023, MicroStrategy’s market cap increased 546%.

Then in the most recent 12 months, it surged 873% to hit a record $102 billion. 

“To see a company jump from a $10 billion market cap [at the end of 2023] to $100 billion in such a short span of time and now qualify and be included in one of the biggest indexes in the world is quite a testament to its legitimacy and relevance overall,” said Jay Woods, chief global strategist at Freedom Capital Markets.

MicroStrategy critics often compare the company to a Ponzi scheme, while bullish supporters describe it as innovative. 

Ben Werkman, an equity analyst and the founder of NumerisX, a consulting firm that specializes in bitcoin treasury advising, told me the Nasdaq inclusion should give other companies more confidence to explore adding bitcoin to their balance sheets.

At the same time, it raises MicroStrategy’s credibility across important corners of the market.

“It’s going to help MicroStrategy from a credit perspective with rating agencies,” Werkman said.

“[A Nasdaq inclusion] changes how the market perceives you as an organization and it gives you better access to capital and a lower cost to any of the debt you bring in.”

Saylor, for his part, has spearheaded the company’s transformation into what’s effectively a leveraged bitcoin proxy.

As of December, MicroStrategy owns 423,650 bitcoins. At the asset’s current price of about $103,000, the stash is worth more than $43.6 billion. 

Notably, passive index fund investors will be buying MicroStrategy no matter the price, Kotzman added, which will likely make the stock increasingly attractive and allow the company to continue acquiring more bitcoin.

Palantir and Axon Enterprise will also join the heavily-traded Nasdaq 100.

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📈Bitcoin hit a new record late Sunday. It touched $106,493 while traditional financial markets were closed overnight to beat its prior peak reached on December 5. Other cryptos including ether and dogecoin also climbed. Bitcoin is currently on a seven-week winning streak, the longest run since 2021. (Bloomberg)

⏰ A wild 24 hours of economic updates. The Fed will kick off with its rate-cut announcement Wednesday, followed by news out of central banks in Japan, the Nordics, and the UK on Thursday. In effect, a year of global sticky inflation culminates with half of the world’s 10 most-traded currency jurisdictions adjusting policy in one 24-hour span. (Bloomberg)

💵 Dollar stores are warning about spending. Budget shopping retailers have increasingly reported signs of financial strain among their customers. Places like Dollar General and Walmart act as economic bellwethers for consumer spending, and they are seeing more signs that lower-income Americans are buckling. (WSJ)

• The Dow dropped for its seventh day in a row Friday for its longest losing streak since 2020 (CNBC)

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• The London Stock Exchange is on course for its fewest listings in 15 years as it struggles to compete with New York (FT)

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• Boeing stock has tumbled 35% this year, placing it among the 20 worst-performers in the S&P 500 (Bloomberg)

• Young Wall Street bankers rely on drugs like Adderall and Vyvanse to get through long hours and high pressure (WSJ)

• Publicly traded US homebuilders purchased 66% of finished lots last quarter (ResiClub)