Passive Demand for Bitcoin: Nasdaq-100 Inclusion!
Latest On-Chain Momentum Update
Dear Bitcoiners,
Take a moment to dive into the details below—understanding this dynamic will greatly increase your confidence in Bitcoin’s long-term upside potential!
Passive Demand for Bitcoin: Nasdaq-100 Inclusion!
In the weeks following the ETF approval at the beginning of this year, we began discussing how ETF flows might impact the underlying Bitcoin market and theorized about the potential dynamics. Fast forward to today, BlackRock is advocating for a 2% portfolio allocation to Bitcoin. We’ve previously talked about how, for example, state pension funds allocating to Bitcoin could have a profound effect, but few truly grasp the scale of this transformation!
When a state pension fund allocates a percentage of its portfolio to Bitcoin, it means that everyday workers, whose paychecks automatically contribute to these funds, gain indirect exposure to Bitcoin. As Bitcoin continues to strengthen its position as an institutional-grade asset, we’ve seen evidence of more and more pension funds adding a direct Bitcoin allocation to their portfolios.
But this week, a significant new development has unfolded! MicroStrategy’s stock, $MSTR, which serves as a proxy for institutions unable to directly invest in Bitcoin due to regulatory constraints, has gained so much traction that it’s now entering the Nasdaq-100 Index. This change, effective December 23, 2024, is a game-changer!
The Nasdaq-100 is an index of the 100 largest non-financial companies listed on the Nasdaq Stock Market, comprising primarily tech companies. The QQQ ETF, designed to replicate the Nasdaq-100, is one of the most traded ETFs globally. Many institutional investors such as pension funds, mutual funds, and insurance companies have exposure to the Nasdaq-100. Starting this month, $MSTR’s inclusion means this exposure will now automatically include Bitcoin!
Here’s the bigger picture: Imagine an employee contributing to a pension fund. Part of their paycheck flows into a portfolio that includes the QQQ ETF, without the pension fund requiring direct Bitcoin exposure. Starting December 23, this ETF will indirectly allocate a portion of that paycheck to Bitcoin via $MSTR.
With these passive flows, Bitcoin is further infiltrating the financial system, creating a foundational layer of demand. This is a development of enormous magnitude, and very few people understand these dynamics.
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Can we already see some of these effects on-chain? In the next part, we'll dive into the STH momentum—a must-see chart.