Bitcoin recently had a scorching hot run. It has some crypto market observers believing new all-time highs are right around the corner. Additionally, it’s having the predictable, though still welcomed, effect of lifting some stocks with intimate ties to the largest digital currency.
The Amplify Transformational Data Sharing ETF (BLOK) is one of the exchange traded funds that stands out when discussing crypto-correlated stocks and that’s one reason why the fund surged nearly 24% for the month ending Feb. 16.
Alone, BLOK’s recent bullishness is commendable. However, those kudos are amplified when noting the ETF’s depth, including exposure to 11 industry groups. That’s comparatively large relative to competing funds in this category. That depth is also helping at a time when some interesting rumors are surfacing regarding some BLOK holdings.
Index Inclusion Could Boost Some BLOK Holdings
Among individual stocks, MicroStrategy (MSTR) is one of the most famously crypto-correlated. That’s meaningful to BLOK investors because that stock is the ETF’s second-largest holding at a weight 5.11%. MicroStrategy started buying bitcoin in 2020. Along the way, the shares have ridden the digital currency’s waves, for better and worse.
Today, the BLOK holding owns 19,000 bitcoin at an average price of $31,224. That’s a good thing when bitcoin is trading north of $50,000. The cryptocurrency’s recent surge is stoking speculation that MicroStrategy could soon be added to the S&P 500.
“To be considered for the S&P 500, MicroStrategy needs to meet several criteria, including a boost in market capitalization. Currently valued at $12.1 billion, the company’s stock price would need to ascend from $718 to $937 to reach the $15.8 billion threshold for index eligibility,” reported Rony Roy for Crypto.news.
As Roy’s article notes, MicroStrategy currently ranks the 535th-largest US-based firm by market value, indicating it has some, though not a lot, work to do before joining the S&P 500.
Though not mentioned in the article, Coinbase Global (COIN) could be another candidate for prestigious index inclusion. But, only if it can cobble together several more consecutive quarters of profitability. The fifth-largest BLOK holding has a market value approaching $46 billion, which is bigger than the market caps of a slew of S&P 500 members.
Should Coinbase, Microstrategy or both eventually make their ways to the S&P 500 and other widely followed indexes, BLOK could benefit because when stocks are added to an index, active fund managers and passive ETFs that follow that benchmark must buy shares of the newly added names.
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