Coinbase made headlines when it became the first cryptocurrency firm to be admitted to the prestigious S&P 500 club in May. It has recently been joined by Bitcoin payment services provider Block, which joined on July 23.
Today Disruption Banking takes a look at how digital currency companies are muscling in on territory conventionally held by older industrial and financial players.
Discover This! Crypto is In
On May 19, Coinbase edged out Discover Financial Services, taking its spot on the Standard & Poors index of 500 leading companies listed on US stock exchanges like NASDAQ and NYSE.
In case you’re new to these waters, this is a big deal: along with the Dow Jones Industrial Average, the S&P 500 is considered a major bellwether in US finance. Put simply, if you are in American big business, this is an elite index you want to be a part of.
Imagine cofounder Jack Dorsey’s delight, then, to learn on July 18 that the crypto company he founded would be nudging out old-school oil and gas firm Hess Corporation to take its coveted place on the S&P 500. Likewise the 10% share price bump that greeted the announcement will have given Dorsey reasons to smile.
Sign of Things To Come?
The key question is: are Block and Coinbase just a couple of flashes in the pan, or a sign that crypto is about to enter the mainstream world of business?
If the latter, the recently approved Genius and Clarity acts could turn out to be quite prescient, as fundamental shifts in who is perceived as bankable in the corporate world take place.
Measurable Gains
Coinbase (COIN) reaped similar S&P inclusion benefits to Block, its share price jumping 24% a week before it took up its spot. Macrotrends reports an all-time stock closing price high of $419.78, attained on July 18 – that’s on the back of a 52-week spread that averages out at around $240.
But the latter could be set to trend upwards if COIN can maintain its recent upsurge – and as at the time of writing, it’s still going strong at $415 per share. If you can’t beat them, join them, as the old adage has it. Coinbase has done precisely that, bringing the brave new world of fintech into closer alignment with traditional big business.
Block Shares More Modest
Despite the reported bump in its own share price, Block (SQ) holdings are more modest. It may be too soon to tell if its S&P 500 admittance will have a long-term impact on its value.
Priced at just over $65 at the time of writing, SQ shares enjoyed their all-time high ($281) in 2021 – well before Block’s S&P 500 inclusion, that had more to do with demand for digital payments fueled by COVID lockdowns and an upswing of interest in Bitcoin.
Other Crypto Players Struggle to Get in
So are there any other crypto purveyors out there that look set to ride the gravy train? Well, some analysts seem to think Strategy (formerly known as MicroStrategy) is a potential candidate… if only it can turn a profit.
Yes, you don’t get to join the big boys without having a big wad: S&P 500 regs insist that a company have been profitable in the most recent calendar year to be considered worthy of joining the club.
That’s bad news for Strategy, which reportedly posted Q1 2025 net losses of $4.2 billion in May.
One Can Always Dream
Despite that, one brave analyst was quoted in June as saying he believed Strategy had a “91% chance” of qualifying on the back of its next-quarter earnings.
Theoretically, he could be right: the S&P requirements place strict emphasis on an applicant firm’s most recent quarterly earnings, but do factor in the aggregate of the prior four quarters overall.
Then again, Strategy’s Q3 and Q4 2024 posted ‘earnings’ amounted to losses of $340 million and $670 million respectively. Bundle that together with the more recent Q1 losses… and the crypto concern would have to clear a staggering $5.2 billion for Q2 this year just to break even.
True, Bitcoin can be volatile, but maybe it’s fair to say expectations need to be managed.
Crypto 500 a Long Way Off
So much for Strategy… so much for crypto dominance of the S&P index? Well, Coinbase is still talking up the sector’s prospects, but then Coinbase would. “Joining this prestigious index reflects how far Coinbase and the industry have come and is a signal of where the world is heading,” says its chief financial officer Alesia Haas.
Fine words, but one can’t help but wonder if Haas would shed any tears if her company remained one half of an elite crypto S&P Two club for the foreseeable.
Looking Ahead
Is that likely to be the case, one might also wonder. It’s hard to tell, but there are plenty of cryptocurrency players with healthy figures on their balance sheets.
Marathon Digital Holdings boasts a market cap of around $6 billion thanks to strong revenues from Bitcoin mining. Then there is crypto infrastructure provider Riot Platforms, which recently announced its next earnings call, and has an estimated value of around $5 billion.
Of course, these figures will fluctuate along with the cryptocurrencies they are derived from – and the S&P 500 is also insistent on other factors like US incorporation and asset liquidity.
But while it doesn’t seem likely that we’ll see a crypto takeover of the ‘Big 500’ any time soon, gone are the days when digital currencies can be ignored or even – remember how it used to be? – laughed at.
#Bitcoin #cryptocurrency #CapitalMarkets
Author: Damien Black
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
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