The Defiance Daily Target 2X Long MSTR ETF (MSTX) surged 12.77% in the pre-market session on Monday, amid news that MicroStrategy, a major holder of Bitcoin, will be joining the prestigious Nasdaq 100 index later this month.
MicroStrategy, a software company, currently holds a massive $44 billion worth of Bitcoin on its balance sheet – roughly 2% of the total supply of the world's largest cryptocurrency. The company's impending inclusion in the Nasdaq 100, scheduled for December 23rd, is expected to fuel further buying in MicroStrategy's stock from funds aiming to replicate the index's composition.
Analysts believe this development could create a "looping cycle" that drives up the price of Bitcoin itself. As MicroStrategy's stock price rises due to increased demand from Nasdaq 100 tracking funds, the company may use its inflated equity value to acquire even more Bitcoin through debt and equity offerings. This, in turn, could further boost Bitcoin's price, potentially allowing MicroStrategy to purchase additional coins and perpetuate the cycle.
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