Matthew Sigel, head of digital assets research at VanEck, in a recent post shared that Block (formerly Square) could become the first Bitcoin holder in the S&P 500.
Requirements for S&P 500 Inclusion
Sigel noted that to be included in the index, a stock must meet six criteria: a market cap over $18 billion, a portion of shares held by public investors above 10%, positive earnings in the most recent quarter and combined over the last four quarters, high liquidity, an IPO seasoning of more than 12 months, and US domicile. Block met the earnings criteria after its Q1 2024 earnings report. However, inclusion in the S&P 500 is not automatic and depends on the Index Committee's discretion.
Block's Potential Integration
Sigel emphasized 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 and Coinbase: Chances of Joining
MicroStrategy, 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 MicroStrategy 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. However, the head of digital assets research at VanEck named it a "controversial pick" given its “pure-play crypto exposure.”
The potential inclusion of Block in the S&P 500 highlights the growing role of cryptocurrencies in global financial systems while companies like MicroStrategy and Coinbase face barriers and uncertainties.
