MicroStrategy (MSTR) is particularly well-positioned to benefit from the Bitcoin (BTC) halving scheduled for around April 20th. This halving will reduce the new supply of cryptocurrencies by 50%, broker Benchmark said in a research report on Monday.
Analyst Mark Palmer notes, “In the past three Bitcoin halvings (2012, 2016, and 2020), we note that the explosive rise in Bitcoin prices occurred only after the halving occurred. “I am doing so,” he said.of Half-life once every 4 years That is when the rewards for miners decrease and the rate of increase in Bitcoin supply slows down.
Benchmark raised its price target on MicroStrategy from $990 to $1,875, but maintained a Buy rating. The new target price is based on the assumption that Bitcoin will reach $150,000 by the end of 2025, up from the previous $125,000. In trading before the U.S. market officially opened, MicroStrategy's stock price rose more than 11% to about $1,601.
“The upcoming Bitcoin halving will cause a supply shock similar to previous halvings, but the impact of this event will be magnified by the simultaneous demand shock created by the emergence of spot Bitcoin exchange traded funds (ETFs). “We think it's possible,” Palmer added. “We expect inflows to Spot Bitcoin ETFs to increase dramatically once institutional investors begin investing in Spot Bitcoin ETFs in earnest.”
MicroStrategy has a unique business model based on acquiring and holding Bitcoin. The company is expected to continue growing its Bitcoin stash using proceeds from capital market transactions and surplus cash generated from its enterprise software business, according to the report.
Benchmark predicts that the company will hold 298,246 Bitcoins by the end of 2025, and as of March 19th, it held 214,246 Bitcoins.
Rival broker BTIG says the software developer's implicit premium on Bitcoin is fueled by investors who want exposure to digital assets but may not be able to invest directly in cryptocurrencies or ETFs, adding It said it is also supported by the company's ability to actively raise funds to purchase BTC. That's what I wrote in my report on Friday.
