MicroStrategy Should Continue to Rally as Bitcoin Halving Nears: Benchmark

MicroStrategy (MSTR) is particularly well positioned to benefit from the bitcoin (BTC) halving set to occur around April 20, when new supply of the cryptocurrency will be cut by 50%, broker Benchmark said in a research report on Monday.

“We note that the three previous bitcoin halvings, in 2012, 2016, and 2020, saw explosive appreciation in bitcoin’s price occur only after the halving had taken place,” analyst Mark Palmer wrote. The quadrennial halving is when miner rewards are reduced, slowing the rate of growth in bitcoin supply.

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

“While the upcoming bitcoin halving will create a supply shock as the previous ones had, we believe the event’s impact could be magnified by the concurrent demand shock created by the emergence of spot bitcoin exchange-traded funds (ETFs),” Palmer wrote, adding that “we expect inflows into spot bitcoin ETFs to grow dramatically once institutions begin to invest in them in earnest.”

MicroStrategy has a unique business model based on the acquisition and holding of bitcoin. The company is expected to continue to add to its bitcoin stash using proceeds from capital markets transactions and excess cash generated by its enterprise software business, the report said.

Benchmark estimates that 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 to bitcoin is supported by investors who want exposure to digital assets but may be unable to invest directly in the cryptocurrency or ETFs, and also supported by the company’s ability to accretively raise capital to purchase additional BTC, it wrote in a report on Friday.

Read more: MicroStrategy’s Implied Premium to Bitcoin Settling Into New Norm, BTIG Says