Michael Saylor's MicroStrategy Can See Substantial Gains From Bitcoin’s Next Halving: Berenberg

Berenberg’s bullish outlook on MicroStrategy (MSTR) is based on the expectation that bitcoin (BTC) will repeat its previous pattern of gains before and after the next halving event, the investment bank said in a research report on Monday.

“The cryptocurrency’s price began to rally in earnest about six months prior to each halving event, with those rallies accelerating meaningfully during the year or more that followed each one,” analysts led by Mark Palmer wrote. The next bitcoin halving, when rewards for mining will be cut by 50%, is expected in the second quarter of next year.

The German bank has a buy rating on MicroStrategy shares with a price target of $430. MicroStrategy shares closed 7% higher at $407.71 on Monday.

Read more: Michael Saylor's MicroStrategy Now Holds Over $4.6B Worth of Bitcoin

If the pattern established by the first three halving events is repeated, then the “pre-halving rally” should begin in around four months from now, the report said. If a rally happens after the fourth halving, then it could continue until around October 2025.

“Bitcoin halvings support the cryptocurrency’s deflationary trend: its inflation rate was 50% in 2011, fell to 12% at the time of the 2012 halving, declined to around 5% in 2016, and currently stands at about 1.8%,” the analysts wrote.

If the fourth halving event repeats the bullish pattern for bitcoin then it is likely that MicroStrategy shares will aso gain, the note said.

MicroStrategy’s ability to refinance its debt maturities would be greatly enhanced “if its share price, and the value of its bitcoin holdings, were to increase meaningfully,” the report added.

Read more: Bitcoin Halving History Provides Little Guidance on Outcome: Coinbase