- Berenberg Capital Markets believes that next year’s Bitcoin halving could trigger a rally in Microstategy’s stock (MSTR).
- Berenberg’s current MSTR price target is $430, which would be an 18-month high.
- The upcoming fourth Bitcoin halving, scheduled for April 26, 2024, is set to blow fresh winds in the sails of Bitcoin-focused stocks.
In a research note shared by the Block, Hamburg-based Berenberg Capital Markets recently highlighted the upcoming Bitcoin halving event as a potential trigger for the bullish case of MicroStrategy, a United States-based software firm.
The investment bank asserts that the software firm’s share price will reach an 18-month high and deliver numbers previously witnessed in January 2022. At the time of writing, the stock was trading at $407.7, up more than 7% over the past 24 hours.
This indicates that the upcoming Bitcoin halving is set to blow fresh winds in the sails of Bitcoin-focused stocks, including Michael Saylor’s founded tech company MicroStrategy.
Berenberg Capital Markets explained its reasons for a bullish outlook on MicroStrategy, for which it has given a $430 price target. Primarily, it derives its value from its substantial holdings of over 150,000 BTC.
Halving events are significant occurrences in the Bitcoin network that happen approximately every four years. During these events, the rate of new coin issuance is reduced by 50%, resulting in a slower influx of new Bitcoins into the industry.
The upcoming fourth Bitcoin halving, scheduled for April 26, 2024, is expected to follow this pattern.
Previous Halving Cycles and Bitcoin’s Market Impact
However, Berenberg’s recent research note has highlighted the historical trend observed in the previous three halvings. It has further suggested that a pre-halving rally could commence in about four months.
The previous halvings cycles have seen the price of Bitcoin surge by a minimum of 682%. At the first Bitcoin halving on November 28, 2012, the price of Bitcoin hovered around $12. Notably, 367 days later, the price peaked at $1,164.
According to the research note, if this rally follows a similar trajectory to previous halvings, it could persist until approximately October 2025.
Berenberg said:
‘’If the historical pattern established by the first three Bitcoin halvings continues with the fourth halving, the pre-halving rally will begin about four months from now. If a rally were to occur after the fourth halving, and if it were as long-lived as the rallies that occurred after the past couple of halvings, then it would continue until around October 2025.
The analysts have noted that while Bitcoin’s supply treads a “predetermined path,” the overall demand for Bitcoin needs to be gauged before anyone can predict the “potential magnitude” of a future rally.
This comes as there is a strong correlation between MicroStrategy’s stock price and the price of Bitcoin, which is estimated to be around 0.90. If the upcoming Bitcoin halving triggers a significant rally in the cryptocurrency’s price, MicroStrategy’s stock will likely follow suit.
This forecast is due to the positive outlook for Bitcoin’s post-halving performance contributing to anticipating a potential rally in Microstrategy’s stock price.
MicroStrategy shares are trading for $412, having gained nearly 181% since the beginning of 2023, according to data from TradingView.
The market’s positive response reflects the optimism surrounding the potential impact of the upcoming Bitcoin halving event on Microstrategy’s performance. Furthermore, halving has since been associated with significant market movements, as investors closely monitor these events for potential opportunities.
