An analyst stated that as long as Bitcoin (BTC) does not drop more than 10% before the end of the second quarter, Michael Saylor's Strategy (MSTR) has a high chance of qualifying for the S&P 500 index.
“I believe MSTR has about a 91% chance of qualifying for the S&P 500 index in the second quarter,” financial analyst Jeff Walton said in a video on Tuesday.
Walton explained that for this to happen, Bitcoin must not fall below $95,240 before June 30. He further clarified that if Bitcoin drops below this level, Strategy—being the publicly traded company with the most Bitcoin holdings, owning 592,345 Bitcoins—will not be able to achieve “second-quarter earnings exceeding the total of the previous three quarters.”
Walton explained that to qualify for the S&P 500 index, a company must have positive total earnings over the past four quarters. However, Strategy has recorded net losses in the past three quarters.
The S&P 500 index is a stock market index that tracks the stock prices of 500 of the largest publicly traded companies in the United States.
Starting January 1, 2025, Strategy will begin applying accounting standard ASU 2023-08, which requires Bitcoin holdings to be revalued at fair market value, with any gains or losses reflected in net income (or loss) for each reporting period.
Walton's prediction is based on Bitcoin's trading price of $106,044 at the time he released the video, as well as the historical probability of Bitcoin dropping 10% within six days since September 17, 2014. The video was released on Tuesday, just six days before the end of the second quarter, which concludes next Monday.
“Looking back at the data since September 17, 2014, Bitcoin's price has dropped more than 10% in 343 instances within any six-day period; while in the other 3,585 six-day periods, the price did not drop more than 10%,” he explained.
“Therefore, in 8.7% of the six-day periods, the price dropped more than 10%, while in the other 91% of the periods, the price did not drop 10%,” he added.
He noted that as the end of June approaches, the probability of Bitcoin not dropping 10% increases. Within five days, this probability is 92.4%; it rises to 93.4% within four days; 94.5% within three days; 95.8% within two days; and reaches as high as 97.6% within one day.
However, the recent escalating geopolitical tensions between Iran and Israel have caused Bitcoin's price to drop below $100,000 for the first time since early May on Sunday. As of the time of this article's publication, Bitcoin is trading at $106,200.
If all of this comes true, Strategy will become the second cryptocurrency company to join the S&P 500 index this year. In May, cryptocurrency exchange Coinbase (COIN) joined the S&P 500 index, and executives in the crypto industry stated that this marks an important step towards broader acceptance of the industry.
Meryem Habibi, Chief Revenue Officer of Bitpace, told Cointelegraph: “This solidifies the legitimacy of the entire asset class.”
In December 2024, Nasdaq announced that Strategy would be included in the Nasdaq-100 index, which comprises the 100 largest stocks listed on the Nasdaq market by market capitalization.
Related: Bitcoin (BTC) accounts for one-third of investors' cryptocurrency portfolios by 2025
This article does not contain investment advice or recommendations. Any investment and trading activities involve risks, and readers should conduct their own research before making decisions.
Original article: “Analyst: Michael Saylor's Strategy has a 91% chance of qualifying for the S&P 500 index in the second quarter”
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