MicroStrategy’s Bitcoin Bet Pays Off: Berenberg Capital Report

Key Points:

• The upcoming Bitcoin halving could see a rally in Bitcoin-focused stocks like MicroStrategy, which holds 152,333 Bitcoins.
• Previous halvings saw BTC surge by at least 682%, and a bullish outlook on MicroStrategy has been given a $430 price target.
• A recent surge of spot BTC ETF applications from large asset managers and pro-BTC remarks from BlackRock CEO Larry Fink show institutional adoption is on the rise.

The upcoming Bitcoin halving is a highly anticipated event that is expected to have a significant impact on Bitcoin-focused stocks such as MicroStrategy.

A recent research note from New York-based investment firm Berenberg Capital Markets has explained why it is bullish on MicroStrategy (MSTR) and has given a $430 price target.

Berenberg has highlighted that MicroStrategy derives the bulk of its value from the 152,333 BTC it held on its books as of June 28. With the BTC halving just a few years away, the analysts predict that a Bitcoin halving rally could see its shares gain significantly in price. According to Berenberg, previous halving cycles have seen the price of Bitcoin surge by a minimum of 682%. At the time of the first Bitcoin halving on November 28, 2012, the price of Bitcoin hovered around $12. However, 367 days later its price peaked at $1,164.

The upcoming halving is scheduled for April 26, 2024, and it will reduce the BTC issuance rate by 50%. This will significantly dampen the velocity at which new BTC enters the crypto market. Based on historical patterns, Berenberg expects that the pre-halving rally would begin about four months from now.

While BTC’s supply follows a predetermined path, the overall demand for BTC needs to be gauged before anyone can predict the potential magnitude of a future rally. To measure this, the research report looked to the recent surge in spot BTC ETF applications from some of the world’s largest and highest-profile asset managers as proof that institutional adoption of BTC is on the rise. Thus, the demand for BTC is expected to increase, contributing to a potential rally in the future.

The investor note also drew attention to the pro-Bitcoin remarks made by BlackRock CEO Larry Fink on July 5, where he sounded like “a high-conviction Bitcoin maximalist.” This indicates that even large institutional investors are starting to see the value in BTC.

The research report was written by equity analyst Mark Palmer along with associates Matthew Laflash and Hassan Saleem. Shares of MicroStrategy are currently trading for $408, having gained nearly 180% since the beginning of 2023, according to data from TradingView. Meanwhile, the price of BTC has increased 84% since the start of the year. In conclusion, the prospects for MicroStrategy and BTC appear to be very promising, and investors are eagerly watching for the next halving cycle to commence.

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