Bitcoin’s Price: The Key to S&P 500 Glory or Just a Fool’s Gold? 💰😅

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What to know:

  • Ah, the grand strategy! It may find itself gracing the illustrious S&P 500 by June 20, if, and only if, the Q1 2025 earnings rise like a phoenix from the ashes of previous bitcoin-induced despair.
  • But lo! Bitcoin must close the first quarter above the company’s average purchase price of $96,337, lest it plunge into the abyss of losses.
  • Should it falter below this sacred threshold, Strategy shall be forced to reckon with its losses, perhaps sealing its fate away from the S&P’s hallowed halls.

Strategy (MSTR) stands on the precipice of potential S&P 500 inclusion by June 20, a tantalizing prospect indeed.

Yet, dear reader, the company finds itself in a peculiar predicament, meeting all eligibility requirements save one: the elusive positive GAAP net income over the trailing 12 months. To ascend to glory, Q1 2025 earnings must soar high enough to obliterate the losses of the preceding three quarters—a feat that may be facilitated by the newly mandated Financial Accounting Standards Board (FASB) digital asset accounting rule.

This FASB decree demands that companies recognize bitcoin (BTC) holdings at fair value, allowing price gains to flow through to the bottom line, as would the inevitable price declines. In a tragic twist, Strategy, in the fourth quarter of 2024, clung to its bitcoin at a meager valuation of less than $16,000 per token, resulting in a staggering $1 billion impairment loss, even as bitcoin danced at around $94,000 by year’s end.

Holy Grail

In a most enlightening analysis by Richard Hass on X, it is posited that, assuming Strategy’s holdings remain unchanged until March 31, bitcoin must close the first quarter above $96,337 for the company to meet the positive trailing 12-month earnings requirement. “With Q4 2024 earnings of -$671 million in net income, MSTR requires a staggering $1.113B in Q1 2025 earnings to emerge from the shadows of negative earnings and bask in the light of S&P 500 eligibility,” he mused. “Given MSTR’s current treasury of 478,740 BTC, the required BTC price on March 31 to achieve this is $96,337.”

If the winds of fortune favor bitcoin prices and MSTR continues its relentless accumulation of tokens, the S&P 500 inclusion may indeed be within reach. As Benchmark analyst Mark Palmer sagely noted:

“MSTR’s embrace of the amended FASB guidance fortifies its case for S&P 500 inclusion. Given its remarkable outperformance of every current index constituent over four years, to exclude it would be nothing short of a scandalous oversight.”

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2025-02-15 20:47