To understand why Nvidia’s earnings held strong, we need to step back and examine its evolving relationship with China - and how US policy has shaped the battleground.

Nvidia and China: A critical relationship (Pre-2022)

Before US limited chip exports to China, China accounted for ~20% of Nvidia’s data center revenue. Chinese tech giants - Baidu, Tencent, Alibaba, ByteDance - depended on Nvidia’s A100 and H100 GPUs to train AI models across language, vision, and video tasks. In fact, even DeepSeek was trained using Nvidia’s A100s.

“By 2021, Liang [founder of DeepSeek] had started buying large quantities of Nvidia GPUs for an AI project, reportedly obtaining 10,000 Nvidia A100 GPUs before the United States restricted chip sales to China.”

It’s clear that Nvidia’s hardware laid the foundation for China’s AI development.

Biden’s export controls (2022–2023): The first blow

In October 2022, the Biden administration introduced strict export controls. Any AI chip capable of enabling a supercomputer with over 100 petaflops FP64 or 200 petaflops FP32 in a 41,600 ft³ system was now restricted.

As a result, the A100 and H100 were suddenly off-limits for China.

To maintain sales, Nvidia engineered a workaround: the H20 - a downgraded version of the H100. The H20 was a compromise: not as powerful as the H100, but within legal limits.

This was still lucrative for Nvidia, but the policy was signal for China to start urgently developing in-house alternatives.

China’s response (2024-2025): The chip push

China has poured $27.5 billion into semiconductor R&D, AI chip design, and data centers. Huawei’s Ascend 910B was developed as a result of this, which now serves as the current flagship chip, deployed in over 9,000 servers at China Mobile.

Trump’s H20 Ban (2025): The second blow

In April 2025, the Trump administration raised the bar further.

The new thresholds banned any AI chip with >70 TFLOPS FP32, or >600 GB/s interconnect bandwidth.

The H20, Nvidia’s carefully designed compromise, was also now illegal to sell to China.

The financial impact to Nvidia was immediate. Nvidia took:

• a $4.5 billion write-down on unsold H20 inventory

• missed $2.5 billion in sales

• projected an $8 billion hit for the following quarter

The silver lining: Global demand outpaces the China loss

In the AI race, hyperscalers - Microsoft, Google, Meta, Amazon - are absorbing every GPU Nvidia can ship. The AI buildout in the U.S., Europe, and the Middle East has more than offset the loss of the Chinese market.

We observe the trend in Nvidia’s China revenue in subsequent years:

• FY 2023: ~$5.79 billion, accounting for 21.45% of total revenue.

• FY 2024: ~$10.31 billion, representing 16.92% of total revenue.

• FY 2025: ~$17.11 billion, making up 13.11% of total revenue.

While Nvidia’s revenue from China has grown in absolute terms, its share of total revenue has declined. Hence as Nvidia diversifies its chip demand, the impact of aggressive anti-China policy on its revenue is reducing - at least in percentage terms.

Blackwell: Nvidia’s Next Generation (2025+)

Nvidia’s future rests on Blackwell: a next-generation architecture designed for the GPT-5 era. The B100 and B200 chips will power the next wave of AI workloads: large language models, robotics, video AI, and multi-modal systems.

Once again, restricted versions are being prepared for China - B40 and RTX Pro 6000D - crippled enough to stay under export thresholds.

Here’s how Nvidia’s chips compare:

The Takeaway

Congratulations to Nvidia on their Q1 earnings! It showed the continued strength of global AI demand, but also reminded us of the fragility of the AI supply chain in a geopolitically divided world.

While Huawei’s chips lag behind in efficiency, lack the CUDA ecosystem, and depend on SK Hynix (a Korean company), China’s resolve is strong. The lead Nvidia holds is not guaranteed forever.

Amid this as consumers, we are fortunate to live in a time where AI can summarize medical scans, generate personalized financial advice, and run smarter home assistants that understand your daily routines. And as investors, we must decide how to allocate funds across geographies with clarity as the landscape evolves.

Thanks for reading the Paasa blog! If this gave you a fresh perspective on the chip wars, share it with someone who’s watching the AI race unfold.

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If you want to be part of the AI race, buy stocks from our ‘Chips’ playlist - 10 companies that are shaping the global silicon economy.

Since the start of the year, the U.S. dollar has fallen by almost 10% from its January peak. The decline accelerated after the Trump administration began implementing a broad range of tariffs, shifting how investors view U.S. stability.

Normally, market turbulence sends investors toward the dollar. This time, the turbulence came from within. The policies unsettling global markets were U.S.-driven, and the dollar - usually seen as the world's safest currency - began to lose ground.

Understanding why this matters requires looking beyond headlines and into how currency strength, purchasing power, and global confidence interact.

How a weaker dollar changes purchasing power

A weaker dollar means American consumers get less value abroad. For example, $100 now exchanges for about €88, compared to around €97 earlier this year.

That difference shows up across everyday life. Even if Americans don’t buy foreign goods directly, many products - electronics, vehicles, household appliances - use imported parts. As the dollar weakens, those parts become more expensive, and those costs pass through to consumers.

Tariffs add another layer, raising costs further. Estimates suggest tariffs alone could increase the average American family’s expenses by about $3,800 this year. A weaker dollar amplifies that effect across a wider range of goods, without exemptions.

Why some advocate for a weaker dollar

A weaker dollar can theoretically help U.S. exporters. When the dollar drops, American goods become cheaper for foreign buyers, potentially boosting sales and supporting manufacturing jobs domestically.

President Trump, for instance, openly supported a weaker dollar as part of his push to revitalize American industry.

But the global economy today is more connected than it was decades ago. Even products assembled in the U.S. often rely on foreign components. Higher input costs can offset the competitive advantage of cheaper export prices.

Retaliatory tariffs and shifting sentiment abroad can further reduce demand for U.S. exports, limiting the intended benefits.

The larger risk: trust in U.S. financial stability

Beyond trade, the dollar’s strength reflects global trust in the U.S. economy.

For decades, U.S. Treasuries have served as the world’s de facto safe asset — a place investors could turn to during uncertainty. That trust allowed the U.S. to run deficits and finance spending at lower costs compared to most other countries.

The current environment challenges that dynamic. Policy uncertainty has made investors reconsider the safety of U.S. assets. Some have begun shifting capital toward other currencies and even into gold, an unusual move given that volatility typically strengthens the dollar.

Implications of a weaker dollar on portfolios

A weakening dollar has multiple, sometimes opposing, effects on portfolios, depending on asset classes and exposures.

1. Global equities can outperform

When the dollar weakens, foreign stocks (non-U.S. equities) tend to rise in dollar terms. This happens because when you hold foreign stocks, their local currency returns get translated back into a weaker dollar, amplifying your gains.

• Example 1: European stocks returning 5% in euros could translate into a 10%+ return in dollars if the euro strengthens at the same time.

• Example 2: Many rupee funds that invest in dollars usually get a boost in returns because of the dollar’s appreciation against the rupee. However, the inverse was true this last month, dragging down their returns.

2. U.S. multinationals can get a tailwind

Companies that earn a significant share of revenue abroad (large U.S. companies or companies with a U.S. holding with a operating subsidiary outside the US) benefit from a weaker dollar because foreign earnings convert into more dollars.

Tracking error in international mutual funds

Out of curiosity, I opened the app to compare Motilal Oswal’s NASDAQ 100 Mutual Fund with QQQM, the US-domiciled equivalent.

Even after accounting for currency movement, MOFN 100 is showing a significant tracking error. The issue stems from how it’s managed, not how the index performs.

Indian AMCs have reached SEBI’s $7 billion overseas investment limit. As a result, new inflows into international ETFs/mutual funds like MON 100/MOFN 100 can't be deployed. SIPs are still coming in, but no new ETF units are being created. This creates a mismatch: prices are now being driven by supply and demand instead of net asset value.

The fund’s performance could further drift away from the actual index. Next time when someone asks me why I don’t just invest in MON 100, I’ll just show them these graphs :)

Closing note

While the dollar fumbled, investors flocked, and markets meandered - Vaibhav Suryavanshi struck 100 off 35, epitomizing the true risk tolerance of a 14 year old.

No hedging required.

The company beat its earning predictions from the quarter ending December by 23%, proving analysts wrong. Revenue was up 36% year-on-year and the stock rallied from $83 to over $124 at its peak, rising almost 50%. However, 2025 has not been kind to the market, and Palantir has definitely struggled in recent days. Let’s take a look.

What does Palantir do?

A running joke has been that despite the excitement around the ‘mysterious’ tech company, no one is quite sure what they actually make. Put simply, Palantir is a big data analytics company that creates software products for clients, primarily defence organizations like the US military agencies and Western allies, as well as select private companies that require analytics software.

Palantir was founded by Peter Thiel, Jon Londsdale, Stephen Cohen, and Alex Karp in 2003 as a response to 9/11 and funded in part by the CIA. Karp has served as CEO and has become an outspoken leader, commenting on defence policy, politics, and his dislike of financial analysts that are trying to "scr*w Palantir”.

Palantir’s first product was Gotham, launched in 2008. Designed primarily for intelligence and defense applications, the software enabled clients to integrate and analyze large datasets from various sources to identify patterns and potential threats. It’s widely known for being used by the US Army in Afghanistan and Iraq to collate intelligence and detect roadside bombs in conflict zones.

What is driving up Palantir?

The company has since expanded into analytics tools for private customers like Morgan Stanley, National Health Service England, Airbus, and more. The company’s early investment in AI has also paid off in recent years, providing a time advantage in creating and deploying tools, and boosting its market valuation.

Most had never heard of the company until its 2020 IPO, when it emerged from the ‘shadows’ to raise capital. Back then, the company was valued at $22bn with revenues of $742 million the year before. Palantir had never turned a profit before its IPO, with $580mn in losses in 2019 as it invested in product and research.

However, Palantir got the software company treatment, with shares up triple within weeks. The rest is history, as the company has quadrupadable revenue and booked profits, maintaining a rosy picture for the future. Moreover, consistent lower predictions from analysts have seen it beat expectations for four quarters in a row, thirce by double digits, all bringing the stock to its record highs in 2025.

What’s next for the company?

Palantir’s stock suffered a combination of a larger market cool-off and Trump’s plans to scale back spending at the Department of Defense. As a defense contractor, the company is exposed to any cuts to the sprawling US defense budgets. While the company is building up in Europe as well, primarily the UK and France, business there is growing at a modest 4%, while the US at over 20% in recent years. The news caused the stock to tumble from an all-time high of $124 in late February to $85 in April.

Despite revenue standing at $2.87bn, investors expect the company’s punchy profile, lower overhead costs compared to its peers, and focus on advanced technologies will propel it to the front of the emerging $150bn+ AI software market (per Nasdaq) in the next three years. Critics argue that the stock is overvalued given the current defense spending climate and a competitive market.

Early investors have already made huge gains from supporting the stock in early 2024 or even since the IPO in 2020. However, Palantir’s push into Artificial Intelligence Platform has created massive opportunities with companies across industries, evidenced by a strong revenue pipeline from existing contracts.

As always, tech companies carry a much higher premium on price-to-earnings ratios due to their future potential. Palantir’s history shows that it has a strong runway to future revenue, especially as defense takes focus globally. However, stock market uncertainty and spending cuts leave the stock vulnerable to sharp rises and falls, a risk to note.

This article is for informational and educational purposes only, and not intended as financial advice.

This "flight to safety" showed just how nervous markets are about the future.

Treasuries’ comeback

The rally in Treasuries yesterday wiped out losses from earlier this year. Back then, concerns over inflation and political uncertainty had hurt the bond market. The 10-year Treasury yield fell 12.5 basis points to 4.50%, its biggest drop in two weeks. At the same time, the two-year yield slipped to 4.17%, the lowest it’s been in over a month.

This movement focused on 5 to 10-year maturities, as investors sought stable ground in an otherwise volatile market. When we talk about "5 to 10-year maturities," we’re talking about bonds that will pay back the full amount (plus interest) in 5 to 10 years.

For context:

• Short-term bonds (like 1-2 years): These are safer but pay less interest. People use them when they think things will improve soon and want their money back quickly.

• Long-term bonds (20-30 years): These pay more interest but are riskier if the economy changes a lot over time.

• The "5 to 10-year" bonds are a middle ground. They’re safer than long-term bonds but still offer decent returns compared to the short-term ones. During uncertainty (like when tech stocks fall), investors want something stable but also rewarding, so they often pile into these medium-length bonds.

What sparked the selloff?

Hard to ignore: DeepSeek - the Chinese model, which was cheaper to produce, implying a higher degree of cost efficiency. This raised doubts about the dominance of US technology companies. Investors began questioning whether high valuations for US tech stocks were justified.

George Saravelos of Deutsche Bank compared this moment to the DotCom crash of the early 2000s. Back then, a sudden tech revaluation caused major market disruptions.

Global ripple effect

The selloff wasn’t just limited to stocks. Safe-haven currencies like the yen and Swiss franc surged. The yen climbed 1.5% to its highest level in five weeks. The Swiss franc jumped 1% as well. European bonds also gained ground, with debt from Germany, France, and Italy benefiting from the flight to safety.

What Comes Next?

Monday’s events highlight how fragile the market is right now. For now, it’s clear: when uncertainty looms, investors turn to the stability of US Treasuries.

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Want to learn more about Paasa? Ask DeepSeek :)

Here’s the breakdown: $100 billion of the investment will roll out immediately, with the rest coming over the next four years. The first data centers—massive, half-a-million-square-foot facilities—are already being built in Texas. Once completed, these hubs will support everything from advanced healthcare analytics to the development of artificial general intelligence (AGI).

Why This Matters

AI is hungry - hungry for data and, even more critically, for computing power. Stargate aims to meet that demand by creating 20 ultra-modern data centers capable of handling the massive workloads required for cutting-edge AI technologies.

Ellison emphasized AI's potential to revolutionize healthcare, including early cancer detection and personalized vaccines. He explained that AI could analyze blood tests to identify cancer fragments and quickly develop vaccines after gene sequencing tumors.

OpenAI CEO Sam Altman, SoftBank CEO Masayoshi Son, and Ellison all credited Trump for helping bring the project to life. Son even went as far as to say, “We wouldn’t have decided to do this unless you won.” Altman also emphasized how the initiative lays the groundwork for AGI, a transformative tech frontier.

The Energy Question

While Stargate is a game-changer for AI innovation, it comes with a hefty energy price tag. AI data centers require immense power to function, and as more facilities come online, the nation’s electricity demand will soar.

Trump addressed these concerns by offering incentives for companies to build on-site power plants, making it easier to manage their energy needs - but I’m curious to see how this plays out.

Still, experts warn of potential strain on the U.S. energy grid. A December report from the North American Electric Reliability Corporation pointed out that about half the country could face power shortages within the next decade as demand rises from AI and other electrification efforts.

Economic Ripple Effects

Stargate’s announcement also marks a shift in federal AI policy. Trump’s move to repeal a Biden-era executive order regulating AI risks signals a more innovation-first approach. Investors seem optimistic, with Oracle’s stock jumping 7% after the news broke. Other tech giants, including Nvidia, Arm Holdings, and Dell, also saw gains. Congratulations on the rally to everyone who had the S&P 500 or NASDAQ 100 in their Paasa portfolio - which is most of you!

AI has been on a meteoric rise since OpenAI launched ChatGPT in 2022. The Stargate project reflects how quickly AI has gone from a niche innovation to a critical driver of economic growth.

The Bigger Picture

I see Stargate as more than just a tech project - it’s a statement. By putting resources into AI infrastructure, the U.S. is signaling its intent to dominate this rapidly evolving space.

It’s a bold bet on the future, and if it succeeds, it could reshape the global AI landscape. Whether the country can navigate the energy and infrastructure challenges remains to be seen, but one thing’s for sure: the race for AI supremacy just got a lot more intense.

When looking at the USD vs INR graph, it’s important to recognize what’s actually occurring beneath the headline rate. The drop in INR value is being caused by either an increase in the supply of rupees, due to capital outflow of trading INR for foreign currencies or using INR to purchase foreign imports, or the decrease in the demand of rupees, due to falling foreign investments on the back of slowing growth and market volatility.

So what’s causing these phenomena today?

The Trump effect

Since November 5th - around the time Paasa launched and the day Trump won office - the dollar has risen by 2.47% from ₹84. A strengthening dollar is bad news for India and residents who are looking to spend on education, travel, or investments in the near future. However, many are pointing to a further slide in the coming months, led by the incoming administration’s economic policies.

Bank of America analysts expect the dollar to hold its strong position through the first half of 2025. Trump has promised three key economic policies, centering around:

• trade tariffs

• cutting taxes across the board

• and deregulation of industry

All three will likely fuel US corporations in different ways, increasing revenues and profits, at least in the short-run.

Tariffs have been Trump’s longest-standing economy belief, ranging back decades. Most believe that COVID derailed plans in 2020 for Trump to expand tariffs to cover more countries, however, 2025 seems to bring new wings to the plan. Reports in the last week have indicated that Trump might look to universally tariff only goods from certain vital sectors, such as defense supply chains (steel, iron, etc.) or energy supplies (batteries, rare minerals etc.). However, President Trump decried the plan on his social media platform, insisting on a universal 10-20% tariff on all goods.

However, it’s hard to ignore that all of Trump’s actions carry a significant risk of inflation as well. Considering the US has only recently emerged from a bout of high prices, with consumers still feeling the pinch on a daily basis. Moreover, the Fed’s decision to ease rate cuts in 2025 to just two reductions signals growing persistence in high prices, which could trend the wrong way if growth isn’t balanced. Universal tariffs, for instance, would lead to immediate price rises for consumers on essentials like food and electronics.

While the dollar remains strong, 2025 will test its resilience as the US looks to upend its historical trade practices.

Things are going well in the labor market

In a New Year’s present to those holding dollars, the US added 256,000 jobs in December per the Labor Department, analyst expectations of around 160,000 on average. Unemployment fell to just 4.1% as median duration of unemployment and permanent job losses dropped as well.

The strong labor market will fuel the Fed’s plan to hold rates steadier for longer, allowing it to combat the final bits of inflation holding back customers. Markets responded with drops across the board, with the S&P 500 falling 1.54% on the news of likely fewer rate cuts. (Covered this in detail in an earlier article)

The resilience of the job market, despite expectations of a slowdown in the coming months, is another reason for investors holding US assets with high rates. With the dollar continuing to appreciate the Indian rupee, we turn to see what’s happening with other global currencies.

Headwinds in rivals

It’s not only the rupee that has taken a beating against the dollar in recent days. The euro, pound, and yen all fell as they each contend with domestic troubles. For India, market volatility has been in focus. GDP numbers in recent months have indicated moderating growth, a worrying sign in an economy still struggling with persistent inflation.

On a closing note, all signs point to the rupee struggling against the dollar in the coming months. While this year’s budget could bring relief to salaries employees in a bid to boost consumption, inflation remains a troubling factor.

Diversifying into dollar-denominated assets remains a wise decision generally, allowing for both safety and steady gains, without the feeling of being squeezed by the USD / INR exchange rate.

Before we jump in further, let’s quickly discuss what bonds are. Bonds are a loan made to a corporation or government by an investor in exchange for a fixed return rate. This means investors receive a fixed interest income on these bonds as well as the promise of the principal back after a period. You may have heard of the US Treasury Note (T-Note) lasting one to 10 years, the T-Bond lasting 20 to 30 years, and the T-Bills lasting four to 52 weeks. The yield on a bond is the annual interest an investor earns each year until maturity.

Notably:

What happened in 2024?

2024 marked a change in the stance of most central banks toward lowering interest rates as inflation eased. The lower interest rates, in turn, will likely see higher yields and prices on bonds, boosting investments in this asset class. The movement of the bond market is clearly linked to rates, as seen in this graph.

Bonds are seen as the ‘safer’ choice to equities, explaining why fears of a recession in the US led to a sudden spike in yields and in turn, lower prices. However, as such fears eased and the Fed indicated slower cuts next year (which we covered recently), there was a selloff in the week before Christmas worth nearly $6 billion.

A look at corporate bonds

As we noted earlier, bonds are issued by companies as well. Corporate bonds had a particularly strong 2024, with investors heavily buying fixed-income assets. The move toward bonds was fueled by two major factors. The first was a bullish stock market pushing risk-averse investor toward safer corporate bonds, hedging their bets. The second has been a lower credit spread between government and corporate bonds since the US Presidential elections, allowing companies to issue bonds cheaply to keen investors.

The week after the election alone saw a massive $50bn raised by corporations in the US, with big names like Goldman Sachs and Caterpillar taking advantage. The lower credit spread means that companies can pay small interest premiums over the US Treasury bonds to secure investment.

As we enter 2025, keep an eye out on the bond market as investors eye whether the economy will continue to grow under the new administration or whether policy changes lead to losses. This will dictate whether bond markets will continue their record runs.

The headline story for the week has been the sudden drop in the US markets following the Federal Reserve’s indication that it will slow rate-cutting in 2025. While the S&P 500 closed down just 2.19% on Friday for the week, buoyed by a stronger inflation report in the closing days, questions linger over high rates for the coming year.

The sell-off followed Chairman Jerome Powell’s comments indicating two rate cuts for next year, or half a percentage point. He added, “I think from here it’s a new phase and we’re going to be cautious about further cuts.” With consistent rate cuts fueling a record-breaking year for large indices, what should you look out for in 2025?

S&P 500’s weekly performance, with Wednesday and Friday both showing shifts in the market. Source: WSJ

Traditional movers: rate cuts, inflation, and more

This week was exemplary of investors reacting to interest rate announcements by the Fed. Despite another cut, fears of 2025 moves led to a sharp drop on Wednesday, with investors believing higher rates could affect borrowing just as businesses bounce back. The move led some to label Powell as the “Grinch who stole Christmas.” We will explore the impact of interest rates on the market next week, so do subscribe!

Just as it looked like the holidays were ruined for some, Friday brought some respite. Inflation, measured by the Fed using the Personal Consumption Expenditure, rose by 2.4%, just shy of expectations of a 2.5% rise. This positive news led to an uptick of just over one percent in most major indices, including the S&P and the Dow Jones. With inflation still cooling, all signs point to easier monetary policy for next year, despite the Fed’s end-of-year announcement.

The drop in markets was also deeply influenced by future policy measures. For one, the US government found itself on the brink of a shutdown after a last-minute bill was scuttled by President-elect Trump and Elon Musk, leading to skepticism in the markets. However, Congress did reach a pared-back agreement in the late hours of Friday to avoid a shutdown, ensuring continued services through March.

Output Booms

With the markets down, many investors will likely be wondering if the downturn will be temporary or prolonged. Here, we can turn to less commonly cited economic indicators for the health of the underlying economy.

Output, measured by the S&P Global Flash US PMI, hit a three-year high in December, rising to 56.6, up 1.7% from November. The charge was led by the services industry, which saw its highest levels thanks to lower inflation and overall spending resilience. However, on the flip side, manufacturing PMI fell 1.7%, continuing a months-long contraction fueled by policy concerns of the incoming Trump administration.

Manufacturing companies have noted concerns about tariffs proposed by the new regime, which will engulf most of the US’ biggest trading partners such as China and Canada. Added to ongoing supply chain issues and higher costs, the index points to continued pressure for a major component of the economy.

However, the services sector continues to boom on the promise of lighter regulation and pro-business policies by the incoming administration. With January 20th less than a month away, investors are preparing for a major policy shift from the last four years that could upend years of relative continuity.

Looking ahead

The Global Flash PMI is only an example of a metric to measure the future health of the economy. Most notably, the stock market may move independently of such indicators, relying on prevailing sentiments. All that said, this week’s swing clearly shows that we have entered a new phase of economic recovery and Trump’s economic policies hold the cards for the markets.

Next week, MicroStrategy, the software company that transformed itself into a Bitcoin powerhouse, will officially join the Nasdaq 100. This is a significant milestone for i) MicroStrategy and ii) Bitcoin’s integration into institutional investing. With over 200 funds and ETFs tracking the Nasdaq 100, institutional portfolios will now gain exposure to Bitcoin through MicroStrategy’s stock.

Why MicroStrategy Matters

MicroStrategy’s story stands out on the Nasdaq 100. Led by co-founder Michael Saylor, the company made a bold move in 2020 by adopting Bitcoin as its treasury reserve asset - and it hasn’t slowed down since.

A major bitcoin player: MicroStrategy holds 439,000 Bitcoin, valued at over $45 billion. This represents around 2% of the total Bitcoin supply, positioning the company among the largest institutional holders of the cryptocurrency.

Skyrocketing Growth: MicroStrategy’s stock has soared 550% this year, fueled by Bitcoin’s climb to a record high of $106,000.

The Flywheel Strategy: What sets MicroStrategy apart is its unique playbook. Unlike Bitcoin ETFs, the company raises funds through long-term convertible debt - sometimes at 0% interest - to expand its Bitcoin holdings. This creates a repeating cycle:

1. Raise capital by issuing debt.

2. Purchase Bitcoin to increase exposure.

3. Boost the stock price as Bitcoin’s value rises.

4. Repeat the process with new fundraising rounds.

This strategy has turned MicroStrategy into a proxy for Bitcoin itself. Investors seeking Bitcoin exposure - especially those in traditional index funds - now get it automatically when they hold QQQ, CSNDX or any Nasdaq 100-tracking product.

The Risks of Betting on Bitcoin

While this strategy works brilliantly during a Bitcoin bull market, it comes with significant risk. If Bitcoin’s price were to decline, MicroStrategy’s stock could fall sharply, creating ripple effects for ETFs and funds tied to the Nasdaq 100.

For institutional investors holding QQQ or similar products, this indirect exposure to Bitcoin may be a welcome diversification or an unexpected gamble - depending on how they view Bitcoin’s long-term potential.

A Pivotal Moment for Bitcoin Adoption

MicroStrategy’s addition to the Nasdaq 100 is more than just another index reshuffle. It signals growing acceptance of Bitcoin within traditional finance and puts the cryptocurrency firmly on the radar of institutional investors.

Bloomberg analysts estimate it will only get a 0.47% weight, making it the 48th biggest holding in the index (out of 100). An analyst mentioned, "This weighting equates to about $2.1b of buying via all the ETFs that track the index which have $451b collectively.”

But it also raises a critical question: Is this a turning point for Bitcoin’s mainstream adoption or a risky move that could add volatility to one of the most important stock indices in the world? What do you think?