The upcoming Bitcoin (BTC) halving is set to blow fresh wind in the sails of 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 its reasons for a bullish outlook on MicroStrategy (MSTR), which Berenberg has given a $430 price target.
According to the analysts, MicroStrategy derives the bulk of its value from the 152,333 Bitcoin it held on its books as of June 28, adding that a Bitcoin halving rally could see its shares gain significantly in price.
“[It] is our expectation that the price of Bitcoin will repeat its historical pattern of rallying both ahead of and following each Bitcoin halving.”
The Bitcoin halving, which is scheduled for April 26, 2024, reduces the BTC issuance rate by 50%, significantly dampening the velocity at which new Bitcoin enters the crypto market.
Last Bitcoin ETF decision deadline: 3/19/24
Bitcoin halving estimate: 4/16/24
— Will Clemente (@WClementeIII) July 10, 2023
“If the historical pattern established by the first three bitcoin halvings continues to play out with the fourth halving, then the pre-halving rally would begin about four months from now,” read the note.
As Berenberg highlights, previous halvings 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.
367 days later its price peaked at $1,164.
The analysts noted that while Bitcoin’s supply treads a “predetermined path,” the overall demand for Bitcoin that needs to be gauged before anyone could predict the “potential magnitude” of a future rally.
To measure this, the research looked to the recent surge in spot bitcoin ETF applications from some of the world’s “largest and highest-profile” asset managers as proof that institutional adoption of Bitcoin is on the rise.
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.”
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 Bitcoin has increased 84% since the start of the year.