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The upcoming bitcoin (BTC) halving looks set to bring fresh air to bitcoin-focused stocks such as Michael Saylor-founded tech firm MicroStrategy.
In a research note shared with Cointelegraph, New York-based investment firm Berenberg Capital Markets explained the reasons for a bullish outlook on MicroStrategy (MSTR), which Berenberg has assigned a $430 price target.
MicroStrategy derives the bulk of its value from the 152,333 bitcoin it holds on its books as of June 28, according to analysts, adding that a bitcoin halving rally could see its shares rise significantly in price.
“[It]is our expectation that the bitcoin price will repeat its historical pattern of rallying before and after each bitcoin halving.”
The bitcoin halving, which is scheduled for April 26, 2024, will reduce the BTC issuance rate by 50%, significantly slowing down the pace of new bitcoin entering the crypto market.
Deadline for Final Bitcoin ETF Decision: 3/19/24
Bitcoin Halving Estimated: 4/16/24
— Will Clemente (@WClementIII) 10 July 2023
“If the historical pattern established by the first three bitcoin halvings continues with the fourth halving, the pre-halving rally will begin about four months from now,” the note reads.
As noted by Berenberg, the price of bitcoin has seen a minimum increase of 682% in previous halving cycles. At the time of the first bitcoin halving on November 28, 2012, the price of bitcoin was around $12.
Its price reached $1,164 after 367 days.
The analyst noted that although the supply of bitcoin follows a “predetermined path,” the overall demand for bitcoin needs to be measured before predicting the “potential magnitude” of future rallies.
To remedy this, the research looked at the recent surge in spot bitcoin ETF applications from some of the world’s “largest and highest-profile” asset managers as evidence that institutional adoption of bitcoin is on the rise.
The investor note also drew attention to pro-Bitcoin comments made by BlackRock CEO Larry Fink on July 5, where he sounded like “a highly-confident Bitcoin maximalist.”
Connected: Bitcoin Supply Shock Will Push BTC Price To $120K – Standard Chartered
The research report was written by equity analyst Mark Palmer with colleagues Mathieu LaFlashe and Hassan Salim.
Microstrategy shares are currently trading at $408, up nearly 180% since the beginning of 2023. statistics From Trading View. Meanwhile the price of bitcoin is up 84% since the beginning of the year.
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