The upcoming Bitcoin (BTC) halving will bring a breath of fresh air to Bitcoin-focused stocks like tech company MicroStrategy, founded by Michael Saylor.
In a research note shared with Cointelegraph, New York-based investment firm Berenberg Capital Markets explained their rationale for a bullish outlook on MicroStrategy (MSTR), for which Berenberg has a price target of $430.
According to the analysts, MicroStrategy derives most of its value from the 152,333 bitcoins it held on its books as of June 28, adding that a Bitcoin halving rally could see the stock price rise significantly.
“[It] is our expectation that the price of bitcoin will repeat its historical pattern of rallying both before and after each bitcoin halving.”
The bitcoin halving, scheduled for April 26, 2024, will reduce the BTC issuance rate by 50%, significantly dampening the speed at which new bitcoins enter the crypto market.
“If the historical pattern established by the first three Bitcoin halvings continues into the fourth halving, then the pre-halving rally would begin in about four months,” the note reads.
As Berenberg points out, Bitcoin’s price has increased by at least 682% in previous halving cycles. At the time of the first bitcoin halving on November 28, 2012, the price of bitcoin was around $12.
367 days later, the price peaked at $1,164.
Analysts noted that while bitcoin supply is following a “preordained path,” aggregate demand for bitcoin needs to be gauged before anyone can predict the “potential magnitude” of a future rally.
To measure this, the study looked at the recent surge in spot Bitcoin ETF applications from some of the world’s “biggest and most well-known” money managers as evidence that institutional acceptance of Bitcoin is increasing.
The investor note also drew attention to BlackRock CEO Larry Fink’s pro-bitcoin remarks on July 5, in which he sounded like “a staunch bitcoin maximalist.”
Related: Bitcoin supply shock will push BTC price to $120,000 – Standard Chartered
The research report was authored by equity analyst Mark Palmer along with collaborators Matthew Laflash and Hassan Saleem.
According to data from TradingView, MicroStrategy shares are currently trading for $408 and are up almost 180% since the beginning of 2023. Meanwhile, Bitcoin’s price is up 84% year-to-date.
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