The upcoming Bitcoin (BTC) halving is set to blow new winds into the sails of Bitcoin-focused stocks such as Michael Saylor who founded tech firm MicroStrategy.
In a research note shared with Cointelegraph, New York-based investment firm Berenberg Capital Markets explained its reasons for the bullish outlook on MicroStrategy (MSTR), which Berenberg has set as a price target of $430.
According to analysts, MicroStrategy derives the bulk of its value from the 152,333 Bitcoin it held on its books as of June 28, adding that the Bitcoin halving could send its stock price skyrocketing.
“[It] It is our expectation that the Bitcoin price will repeat its historical pattern of rising before and after each Bitcoin halving.”
Bitcoin halving, scheduled for April 26, 2024, will reduce the issuance rate of BTC by 50%, significantly slowing down the speed of new Bitcoin entering the cryptocurrency market.
“If the historical pattern created by the first three Bitcoin halvings continues to play out with the fourth halving, the pre-halving rally will begin about four months from now,” the note read.
As Berenberg explains, previous halvings cycles have seen the Bitcoin price rise by at least 682%. At the time of the first bitcoin halving on November 28, 2012, the price of bitcoin was hovering around $12.
After 367 days, its price peaked at $1,164.
Analysts note that while Bitcoin supply is on a “predetermined path”, overall demand for Bitcoin needs to be measured before anyone can predict the “potential size” of a future rally.
To measure this, the research looked at the recent surge in spot Bitcoin ETF applications from some of the “biggest and best-known” asset managers in the world as evidence that institutional adoption of Bitcoin is on the rise.
The investor note also drew attention to pro-Bitcoin remarks made by BlackRock CEO Larry Fink on July 5, in which he sounded like a “highly convinced Bitcoin extremist.”
Related: Bitcoin Supply Shock Will Send Bitcoin Price To $120K – Standard Chartered
The research report was written by equity analyst Mark Palmer and his partners Matthew LaFleche and Hassan Slim.
MicroStrategy shares are currently trading for $408, having gained nearly 180% since the start of 2023, according to data from TradingView. Meanwhile, the bitcoin price is up 84% since the beginning of the year.
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