Block's Bitcoin Strategy Could Pave the Way for S&P 500 Inclusion
Could This Fintech Giant Bring Bitcoin to the S&P 500?
Block, the fintech company founded by Jack Dorsey, is making waves with its bold Bitcoin strategy. According to Matthew Sigel, Head of Digital Assets Research at VanEck, this strategy could soon make Block the first company in the prestigious S&P 500 index with an "explicit" plan for accumulating Bitcoin. This potential milestone highlights the growing acceptance of Bitcoin within mainstream finance.
Checking Off the Requirements
Sigel outlined his reasoning in a recent post on X (formerly Twitter), explaining that Block is close to meeting the key criteria for S&P 500 inclusion. These criteria include a market capitalization exceeding $18 billion, a public float greater than 10%, positive earnings in the most recent quarter and over the previous four quarters (GAAP), high liquidity, at least 12 months since its IPO, and U.S. domicile. While Tesla, another major company, holds Bitcoin, Sigel argues that Block's "explicit strategy" of allocating 10% of its monthly Bitcoin gross profits to Bitcoin investment sets it apart.
Sigel anticipates that Block will meet the earnings criteria after the first quarter of 2024. He notes that historically, companies meeting all requirements have been added to the index within three to 21 months. However, he also acknowledges that inclusion isn't solely formulaic and ultimately rests on the discretion of the S&P 500 Index Committee.
Why Block, and Not Coinbase?
While Coinbase also meets the requirements, Sigel suggests that its "pure-play crypto exposure" might make it a more controversial choice for the committee. He further points out that financial firms currently make up about 14% of the S&P 500, suggesting room for further representation from the sector.
Block's Bitcoin Commitment:
Formerly known as Square, Block has embraced Bitcoin since its inception. As the eighth-largest corporate holder of Bitcoin, Block currently holds 8,363 BTC, worth approximately $775 million, according to BitcoinTreasuries.net.
What's Next for Block?
On January 10, Block announced a ticker symbol change from SQ and SQ2 to XYZ, effective after it releases its Q4 2024 financial results on February 20. This change reflects the company's evolution and broader ambitions beyond its initial focus on payments.
Implications for Bitcoin:
Block's potential inclusion in the S&P 500 with a defined Bitcoin strategy would be a landmark event, further legitimizing Bitcoin as an investable asset for major corporations. It could also pave the way for other companies with similar strategies to join the index, potentially increasing mainstream adoption of Bitcoin.