The upcoming Bitcoin (BTC) halving is expected to have a positive impact on Bitcoin-focused stocks such as MicroStrategy, according to New York-based investment firm Berenberg Capital Markets. In a research note shared with Cointelegraph, Berenberg explained its bullish outlook on MicroStrategy (MSTR) and set a price target of $430 for the company.
One of the main reasons for Berenberg’s positive outlook is MicroStrategy’s substantial Bitcoin holdings. As of June 28, the firm held 152,333 Bitcoin on its books, which the analysts believe adds significant value to the company. They suggest that if there is a Bitcoin halving rally, MicroStrategy’s shares could increase in price.
The Bitcoin halving, scheduled for April 26, 2024, reduces the rate at which new Bitcoin enters the market by 50%. This decrease in supply is expected to create a scarcity effect and potentially drive up the price of Bitcoin.
Berenberg refers to the historical pattern established by previous Bitcoin halvings, which has seen the price of Bitcoin surge by at least 682%. For example, after the first halving in November 2012, the price of Bitcoin rose from around $12 to a peak of $1,164 within 367 days. The analysts believe that if this pattern continues, a pre-halving rally could begin in about four months.
However, the research note also acknowledges the importance of overall demand for Bitcoin in determining the magnitude of a future rally. The recent surge in spot Bitcoin ETF applications from major asset managers indicates increased institutional adoption of Bitcoin. Additionally, the pro-Bitcoin remarks made by BlackRock CEO Larry Fink further underscore the growing interest in the cryptocurrency.
The research report was written by equity analyst Mark Palmer, along with associates Matthew Laflash and Hassan Saleem. They believe that the combination of MicroStrategy’s Bitcoin holdings, the historical pattern of Bitcoin halvings, and the increasing institutional adoption of Bitcoin paints a positive picture for the company’s future.
Currently, MicroStrategy shares are trading at $408, representing a gain of nearly 180% since the beginning of 2023. In comparison, the price of Bitcoin has increased by 84% during the same period.
Overall, Berenberg Capital Markets anticipates that the upcoming Bitcoin halving will bring fresh momentum to Bitcoin-focused stocks like MicroStrategy. The research note provides a $430 price target for MicroStrategy and suggests that a Bitcoin halving rally could potentially drive its shares to even higher prices. With the combination of a decrease in Bitcoin supply and increased institutional adoption, the stage is set for a potentially significant surge in the price of Bitcoin and related stocks in the near future.
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