As investor sentiment wavers and Bitcoin acquisitions slow, Michael Saylor’s Strategy, recognized as the biggest corporate Bitcoin holder, has a promising chance of gaining a spot in the S&P 500 by the end of 2023, as per 10X Research. The company is set to disclose its Q3 earnings on Thursday, anticipated to reflect a significant gain of $3.8 billion from Bitcoin’s fair-value accounting.

A successful quarter would bolster the likelihood of inclusion in the S&P 500 come December 19, with 10X Research estimating a probability of 60% to 70%.

“Capitulation always feels like the end — until it quietly marks the beginning,” stated the report. “The October 30 earnings release could stir new speculation regarding the December 5 S&P 500 inclusion decision, a scenario we estimate at around 70% probability.”

However, despite a bleak investor outlook, the anticipated earnings report is perceived as a significant catalyst for growth.

Strategy Bitcoin Buying Source: 10x Research

Decline in Bitcoin Purchases and Valuation Concerns

This forecast arises amidst widespread anxieties regarding the viability of digital asset treasuries (DATs), as numerous firms, including Strategy, have reported falling market net asset values.

The market net asset value (mNAV) compares a company’s enterprise worth against their crypto assets. Values exceeding 1 permit companies to raise capital through new share issues, while those below 1 complicate fundraising efforts.

A number of DATs have witnessed their mNAVs dip below critical thresholds, impeding their capacity to enhance capital. Affected companies include Strategy, Bitmine, Metaplanet, Sharplink Gaming, Upexi, and DeFi Development Corp.

Digital Asset Treasuries’ mNAVs Source: Standard Chartered

Liquidity in the Crypto Market Expected to Return

In recent times, Strategy slowed its Bitcoin purchases, acquiring only 778 BTC in October, a stark contrast to the 3,526 BTC purchased the previous month.

Regardless of the slump in Bitcoin buying and recent market setbacks, 10X Research posits that this juncture in the crypto cycle may herald a return of liquidity and significant market movements.

“With the NAV premium largely unwound, resulting in $18 billion in losses for investors and restarting volatility, the risk-reward dynamic shifts away from caution against downturns to readiness for forthcoming developments.”

Despite this optimistic perspective, Strategy recently obtained a “B-” credit rating from S&P Global, categorizing it within speculative realms usually referred to as “junk bonds,” although it maintains a favorable stock outlook.

This instance marks the inaugural instance of an S&P Global evaluation for a Bitcoin-centric treasury firm, potentially setting a new standard for traditional financial entities assessing crypto businesses.

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