MicroStrategy, the world's largest corporate holder of Bitcoin, has made its way into the prestigious MSCI World Stock Index, a move that could provide a significant liquidity boost to its shares (MSTR). This development comes on the heels of MicroStrategy's impressive stock performance, which has outpaced the price rally of Bitcoin throughout 2023 and early 2024.

MicroStrategy's MSCI World Index Inclusion

In a statement on Tuesday, MSCI Inc. announced that MicroStrategy, a prominent enterprise software maker, has become one of the top three additions to the MSCI World Index based on market capitalization. This inclusion highlights the growing integration of crypto exposure into traditional investment portfolios.

With billions of dollars tracking or being benchmarked against MSCI's global index, the addition of firms like MicroStrategy underscores the increasing importance of cryptocurrency assets in investment strategies. This trend is further exemplified by the emergence of new U.S. and Hong Kong exchange-traded funds (ETFs) that directly hold digital assets, which could attract interest from multi-asset funds over time.

MicroStrategy's Bitcoin Advocacy and Holdings

MicroStrategy's co-founder, Michael Saylor, is well-known for his advocacy of Bitcoin. During the Covid-19 crisis, the company made headlines by allocating a portion of its cash reserves to the original cryptocurrency. As of April 26, MicroStrategy held a substantial amount of 214,400 Bitcoins.

MSTR Stock Performance and Outlook

Over the past year, the share price of MicroStrategy (MSTR) has quadrupled, outperforming the Bitcoin price rally by a staggering 130%. Earlier this year, when the Bitcoin price touched its all-time high of $74,000, the MSTR stock also rallied to $1,919. However, it has retraced more than 30% in a strong pullback over the past month.

Investors often view MicroStrategy as a proxy for holding Bitcoin, and the launch of spot Bitcoin ETFs this year in the U.S. has challenged the company's market dominance. In March, Kerrisdale Capital Management LLC announced its decision to short the stock, citing its rapid growth outpacing the surge in the digital asset's price.

Despite these challenges, MicroStrategy currently boasts four analyst buy ratings, with an average 12-month price target of $1,678.75, nearly 30% higher than the stock's current level, as per data compiled by Bloomberg.

The inclusion of MicroStrategy in the prestigious MSCI World Index could serve as a potential catalyst for a rally in the MSTR stock price, as it may attract increased institutional interest and liquidity to the shares.