MicroStrategy (MSTR) Should Continue to Rally as Bitcoin (BTC) Halving Approaches: Benchmark

MicroStrategy (MSTR) is particularly well-positioned to benefit from the Bitcoin (BTC) halving, scheduled to take place around April 20, when the cryptocurrency's new supply will be reduced by 50%, broker Benchmark said on Monday a research report.

“We note that in the three previous Bitcoin halvings in 2012, 2016, and 2020, an explosive increase in the price of Bitcoin only occurred after the halving occurred,” wrote analyst Mark Palmer. The halving, which occurs every four years, reduces miners' rewards, slowing the growth rate of Bitcoin's supply.

Benchmark increased its price target on MicroStrategy to $1,875 from $990 while maintaining its Buy rating. The new price target is based on the assumption that Bitcoin will reach a value of $150,000 by the end of 2025, up from $125,000 previously. Shares of MicroStrategy rose more than 11% to around $1,601 in trading before the official opening of U.S. markets.

“While the upcoming Bitcoin halving will trigger a supply shock like previous ones, we believe the impact of the event will be compounded by the simultaneous demand shock caused by the emergence of spot Bitcoin exchange-traded funds (ETFs). “We expect inflows into spot Bitcoin ETFs to increase dramatically once institutions begin investing in them in earnest.”

MicroStrategy has a unique business model based on acquiring and owning Bitcoin. The company is expected to further replenish its Bitcoin supply with proceeds from capital markets transactions and excess cash from its enterprise software business, the report said.

Benchmark estimates the company will hold 298,246 bitcoins by year-end 2025, up from the 214,246 coins it owned as of March 19.

Rival broker BTIG said the software developer's implied premium over Bitcoin is supported by investors who want exposure to digital assets but may not be able to invest directly in the cryptocurrency or ETFs, and also by the ability of the Company is supported to raise capital to purchase additional BTC. said a report on Friday.

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