The NASDAQ 100 index tracks the 100 biggest non-financial companies in the United States. If you own the Paasa Active Growth (High Risk) or Paasa Balanced Growth (Medium Risk) portfolio, you are indirectly betting on Bitcoin.
Next week, MicroStrategy, the software company that transformed itself into a Bitcoin powerhouse, will officially join the Nasdaq 100. This is a significant milestone for i) MicroStrategy and ii) Bitcoin’s integration into institutional investing. With over 200 funds and ETFs tracking the Nasdaq 100, institutional portfolios will now gain exposure to Bitcoin through MicroStrategy’s stock.
Why MicroStrategy Matters
MicroStrategy’s story stands out on the Nasdaq 100. Led by co-founder Michael Saylor, the company made a bold move in 2020 by adopting Bitcoin as its treasury reserve asset - and it hasn’t slowed down since.
A major bitcoin player: MicroStrategy holds 439,000 Bitcoin, valued at over $45 billion. This represents around 2% of the total Bitcoin supply, positioning the company among the largest institutional holders of the cryptocurrency.
Skyrocketing Growth: MicroStrategy’s stock has soared 550% this year, fueled by Bitcoin’s climb to a record high of $106,000.
The Flywheel Strategy: What sets MicroStrategy apart is its unique playbook. Unlike Bitcoin ETFs, the company raises funds through long-term convertible debt - sometimes at 0% interest - to expand its Bitcoin holdings. This creates a repeating cycle:
- Raise capital by issuing debt.
- Purchase Bitcoin to increase exposure.
- Boost the stock price as Bitcoin’s value rises.
- Repeat the process with new fundraising rounds.
This strategy has turned MicroStrategy into a proxy for Bitcoin itself. Investors seeking Bitcoin exposure - especially those in traditional index funds - now get it automatically when they hold QQQ, CSNDX or any Nasdaq 100-tracking product.
The Risks of Betting on Bitcoin
While this strategy works brilliantly during a Bitcoin bull market, it comes with significant risk. If Bitcoin’s price were to decline, MicroStrategy’s stock could fall sharply, creating ripple effects for ETFs and funds tied to the Nasdaq 100.
For institutional investors holding QQQ or similar products, this indirect exposure to Bitcoin may be a welcome diversification or an unexpected gamble - depending on how they view Bitcoin’s long-term potential.
A Pivotal Moment for Bitcoin Adoption
MicroStrategy’s addition to the Nasdaq 100 is more than just another index reshuffle. It signals growing acceptance of Bitcoin within traditional finance and puts the cryptocurrency firmly on the radar of institutional investors.
Bloomberg analysts estimate it will only get a 0.47% weight, making it the 48th biggest holding in the index (out of 100). An analyst mentioned, "This weighting equates to about $2.1b of buying via all the ETFs that track the index which have $451b collectively.”
But it also raises a critical question: Is this a turning point for Bitcoin’s mainstream adoption or a risky move that could add volatility to one of the most important stock indices in the world? What do you think?
