According to analysts, Michael Saylor's Strategy may become the next cryptocurrency company to join the S&P 500 stock market index. This index is a benchmark for the 500 largest publicly traded companies in the U.S. by market capitalization. However, the company still needs to clear hurdles before being included.
Market analyst Jeff Walton predicts that Strategy has a 91% chance of joining the index, as the company is moving towards meeting all the requirements for inclusion in the benchmark.
According to Nasdaq data, Strategy has a daily trading volume of millions of shares, with a market capitalization exceeding $92 billion at the time of writing, and a positive Generally Accepted Accounting Principles (GAAP) net income of over $5.3 billion over the past four quarters.
Strategy is listed in the Nasdaq-100 index, which tracks the 100 largest companies by market capitalization listed on the technology-focused Nasdaq stock exchange.
However, even if the company meets all the requirements and is included in the major stock market index, it can still be rejected for inclusion if the committee responsible for evaluating companies decides not to add it after a "holistic" review of potential candidates.
According to S&P Global's methodology, a company must have a market capitalization of at least $22.7 billion, a liquidity ratio of 0.75 or higher (annual trading volume divided by company market capitalization), and a minimum trading volume of 250,000 shares per month to qualify.
The total net income calculated under GAAP standards for the past four quarters must be positive, and the most recent quarter must be profitable to be included in the index.
The U.S. Index Committee is responsible for adding new companies to the index, consisting of 10 voting committee members, each with equal voting rights. Decisions by the committee are made by a simple majority vote.
Strategy is the world's largest Bitcoin (BTC) treasury company by holdings, currently holding 636,505 BTC in its corporate treasury, according to BitcoinTreasuries data, while publicly traded companies collectively hold over 1 million BTC.
According to a report by Bloomberg on Thursday, potential challenges approved by the committee include the sustainability of Strategy's crypto treasury model and high stock price volatility. For example, Strategy's 30-day price volatility averages 96%.
The S&P 500 is a weighted stock market index of the 500 largest companies in the U.S. by market capitalization, rebalanced quarterly to reflect changes in index composition.
Companies in the S&P 500 attract passive fund flows into the crypto market, helping to boost prices over time while further intertwining digital assets with traditional financial markets.
Coinbase became the first cryptocurrency company to be included in the S&P 500 index, joining the benchmark in May.
The tech company Block, founded by Jack Dorsey, was elevated to the index in July, with a market capitalization exceeding $46 billion at the time of writing.
Related: Trust Wallet partners with Ondo Finance and 1inch to launch tokenized stocks and ETFs
Original article: “What Could Block Strategy's Path to the S&P 500”
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