Strategy still targets the S&P 500 despite the Bitcoin crash

While bitcoin falters, one company is making the opposite bet. Strategy, the largest corporate holder of BTC, continues to buy massively in the midst of the turmoil, where others are fleeing. Its radical strategy, often criticized, could however open the doors to the very selective S&P 500 as early as December. A possibility which, until recently, was still financial science fiction. This scenario crystallizes a major shift between institutional finance and cryptos.

Strategy absorbs the shock

The latest correction in the crypto market, marked by a significant drop in the price of bitcoin, has not shaken Strategy's determination.

Although its stock has lost more than half its value, falling from $474 to around $207, the company continues to increase its BTC reserves. On Monday, it announced the purchase of an additional 8,178 bitcoins for an amount of $835 million, well beyond its usual pace of monthly accumulation.

Asked about its ability to withstand extreme market fluctuations, Michael Saylor, executive chairman of Strategy, said declared : “the company is designed to take an 80 to 90% drop and continue to operate”.

In a note published Wednesday, Matrixport confirms this operational solidity and rules out any imminent risk of forced liquidation. The report specifies that the current pressure mainly concerns investors who acquired shares at an overvalued net asset value (NAV), who are now suffering the effects of its compression. Several indicators attest to this situation:

• The stock price was more than halved, without leading to a massive disengagement from the Bitcoin strategy;

• The latest purchase of BTC by Strategy is the largest in several months, in a bear market context;

• The company has demonstrated an ability to withstand extreme losses, according to its own executives;

• Matrixport considers the risk of liquidation to be irrelevant in the short term, emphasizing instead the impact for recent shareholders;

• At the same time, several other crypto cash companies, including Bitmine, Metaplanet, Upexi and DeFi Development Corp, are seeing their mNAV ratio fall below the critical threshold of 1, compromising their ability to issue new shares to raise funds.

Strategy therefore appears, at this stage, as a special case in the Bitcoin treasury ecosystem. The company is resilient, structured and still active, despite market pressure.

Towards the S&P 500: legitimization of the Bitcoin model?

Despite market turbulence and a declining stock valuation, Strategy still appears on track to join the S&P 500 index.

According to an analysis note from Matrixport, this inclusion could take place as early as December. The optimism is shared by the company 10X Research, which estimates the probability of this event at 70%, as it indicated at the end of October. Analysts point out that, despite the price correction, Strategy's stock now appears “relatively undervalued compared to the evolution of bitcoin”which reinforces its relevance in the stock market landscape.

Additionally, Strategy received a rating “B-” from S&P Global Ratings, a first for a company relying mainly on Bitcoin cash. If this rating remains in the speculative category of “high yield bonds”it sets an unprecedented precedent in the valuation of companies with high crypto exposure.

For the first time, a Bitcoin-oriented company is being considered by traditional rating standards, which could pave the way for other similar applications. However, this normalization remains fragile, as analysts emphasize the need for Strategy to maintain an mNAV ratio above 1 in order to continue raising funds, a condition that is becoming increasingly difficult for its competitors to meet.

If the inclusion of Strategy in the S&P 500 were to materialize after the integration of Robinhood, it would be a major symbolic turning point for the industry. This would confirm that bitcoin, once marginalized, can now coexist with the strict criteria of American institutional finance. However, this official recognition could also reshuffle the cards, because Bitcoin cash companies will then have to face an unprecedented requirement for transparency, governance and financial solidity.