The fintech company Block could be the first publicly listed company holding Bitcoin (BTC) in its treasury to integrate the S&P 500 Index within 21 months, according to Matthew Sigel, head of digital assets research at VanEck.
He highlighted that the firm, founded by Twitter co-founder Jack Dorsey, reportedly satisfied the final hurdle for listing after its strong first-quarter 2024 earnings report.
Sigel explained that a company must meet six primary criteria to fit into the S&P 500. The first is exceeding a market cap of $18 billion, followed by publicly trading at least 10% of its shares.
A company should also present positive GAAP earnings in the most recent quarter and a positive sum of GAAP earnings over the past four quarters. In addition to high trading volume and liquidity, it should have a track record of at least 12 months after being listed and have its headquarters in the US.
However, inclusion in the S&P 500 is not a mechanical process. The decision ultimately rests with the S&P Index Committee, which considers qualitative factors such as sector representation and the broader economic composition.
Moreover, it historically takes 3 to 21 months for a company meeting all the criteria to be added to the index. Sigel highlighted the extreme example of Lululemon Athletica (LULU), which took up to 65 months to integrate the S&P 500, which makes the deadline for a potential Block inclusion uncertain.
MicroStrategy, the publicly traded company with the largest BTC treasury, recently joined the Nasdaq 100 Index after its shares soared over 400% in 2024.
Sectoral dynamics
Sector diversification is pivotal in the Index Committee’s deliberations. The committee aims to align the S&P 500’s sector composition with the “broader economy,” which Sigel pointed out as an undefined concept.
As a result, he used the S&P Total Market Index as a benchmark, finding out that financials currently account for 13.9% of the S&P 500, compared to 14.6% in the broader index, suggesting there is room for an addition from this sector.
Block currently holds 8,211 BTC, according to data from the Bitcoin Treasuries aggregator, which is worth over $770 million at the price of $93,816.34 as of press time. The firm has been a vocal advocate for Bitcoin, and Dorsey has positioned BTC as central to Block’s mission.
One of Sigel’s followers questioned him about Coinbase’s integration in the index, claiming it also meets all six criteria. Although the crypto firm meets the requirements, the head of digital assets research at VanEck called it a “controversial pick” given its “pure-play crypto exposure.”
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