Strategy, formerly, MicroStrategy may soon join the S&P 500 index, according to crypto market firm 10X Research.
In particular, 10x Research says that the company has about a 70% chance of being added by year-end. The forecast comes ahead of Strategy’s third-quarter earnings release, expected to show a massive $3.8 billion gain from its Bitcoin holdings.
Strategy’s Bitcoin-driven rise
Strategy, which was once known mainly as a business intelligence software company, has pivoted and set its identity around Bitcoin. The firm has steadily built its crypto reserves since 2020 using a mix of debt and equity offerings to fund purchases.
According to 10X Research, this Bitcoin-focused approach could soon pay off.
10x Research says that Strategy has a shot at the S&P | Source: 10x Research
The firm’s report said Strategy’s third-quarter numbers might set it up for inclusion in the S&P 500 as soon as December 19. That would make it one of the few companies with heavy Bitcoin exposure in the major US index.
Slowing Bitcoin Purchases, Steady Confidence
While Strategy has continued to buy Bitcoin, its pace slowed in October. The company added only 778 BTC that month, which was down from 3,526 BTC in September.
That stood as a 78% drop in accumulation and came in as one of its smallest acquisition months in years.
Even so, analysts at 10X Research see this slowdown as part of a natural market cycle. They believe that the current stage could be the point where liquidity returns and new price movements begin to form.
The report noted that investor losses from recent market corrections have reached around $18 billion, but volatility is increasing again.
This means that trading activity is back again, stronger than before.
Despite the slowdown, Strategy remains the world’s largest corporate Bitcoin holder with more than 640,000 BTC valued at roughly $74 billion.
Earnings Report Could Trigger Speculation
Strategy’s third-quarter earnings are scheduled for October 30 and are seen as a major moment for the company. The expected $3.8 billion valuation gain from Bitcoin accounting could improve investor sentiment and create interest in the stock.
Analysts say that Strategy has performed very well this year | Source: X
10X Research said that if the report meets expectations, the probability of S&P 500 inclusion is expected to rise. The firm described the event as an “obvious catalyst” for Strategy’s share price, which has faced pressure since midyear.
The S&P committee usually reviews possible additions based on profitability, market capitalization and trading volume. A strong third quarter could push Strategy into the qualifying range and give it a place among America’s top 500 publicly traded firms.
Analysts See a Strong Long-term Outlook
Despite some negative headlines, analysts seem optimistic. TD Cowen maintained its “Buy” rating on Strategy and set a price target of $620. That represents about 114% upside from current levels.
Analysts Lance Vitanza and Jonnathan Navarrete said the company continues to “convert market appetite for volatility into Bitcoin.” They expect Strategy to hold nearly 900,000 BTC by 2027, which is over 4% of Bitcoin’s total supply.
S&P’s View and the New “Junk Bond” ating
S&P Global Ratings recently gave Strategy a B-minus credit rating. This rating places it in the speculative (or “junk bond”) category. The agency said the company’s heavy Bitcoin exposure makes it open to price swings and liquidity shocks.
S&P also noted that Strategy’s debt and dividend obligations are in US dollars, while most of its assets are in Bitcoin.
This creates a currency mismatch that can worsen financial risk. Still, the rating came with a stable outlook and means that the S&P does not expect immediate trouble.
Source: https://coinpaper.com/11984/10x-research-says-strategy-has-70-chance-to-join-s-and-p-500-by-december
