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Matthew Sigel, head of digital assets research at prominent investment firm VanEck, in a latest X post has shared that Block (formerly Square) could become the First Bitcoin Hodler in the S&P 500.
$SQ May Become the First Bitcoin Hodler in the S&P 500
In order for a stock to be added into the index, six main criteria must be met, including 1) market cap>$18B, 2) public float >10%, 3) the most recent quarter's earnings should be positive & the sum of the previous four… pic.twitter.com/YycYUuLOw8
— matthew sigel, recovering CFA (@matthew_sigel) January 9, 2025
The Requirements
He noted that in order to be added into the index, a stock must meet six criteria: 1) market cap over $18B, 2) the portion of shares held by public investors should be above 10%, 3) positive earnings in the most recent quarter and the sum of the previous four quarters GAAP earnings should also be positive, 4) high liquidity, 5) an IPO seasoning of more than 12 months, and 6) US domicile.
He highlighted that Block met the earnings criteria after its 1Q24 earnings report. However, he also shared that the S&P 500 inclusion is not automatic and depends on the Index Committee’s discretion. Historically, companies that meet all requirements are included within 3 to 21 months, with LULU being an exception at 65 months.
He also noted that Sector diversification is a key factor for the Index Committee, aiming to align the S&P 500’s sector composition with the broader economy. Notably, Block initially bought $50 million in Bitcoin in October 2020 and an additional $170 million in February 2021. CEO Jack Dorsey is a long-time supporter of Bitcoin.
MSTR, COIN Unlikely?
MicroStrategy (MSTR), a leading corporate Bitcoin holder, was recently added to the Nasdaq-100 but is unlikely to join the S&P 500 soon, despite strong performance in 2024. Eric Balchunas from Bloomberg suggested the S&P 500 inclusion committee might block MSTR even if it qualifies. Bitwise predicted Coinbase could join the S&P 500 this year.
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 named it a “controversial pick” given its “pure-play crypto exposure.”
