A winning bet on Bitcoin? The man who almost seemed like a madman in 2020 may turn out to be an outstanding strategist at the dawn of Bitcoin’s halving. Michael Saylorwith 150,000 bitcoins safely tucked away in his piggy bank, patiently awaits April 2024and Bitcoin’s quadrennial rendezvous.
MicroStrategy’s bitcoin hoarding strategy pays off?
MicroStrategy CEO Michael Saylor has accumulated bitcoins like crazythroughout the last bull run. Between 2020 and 2023, no fewer than 152,000 bitcoins joined the company’s coffers, for a total of average purchase price which is now approaching 30,000 dollars per bitcoin.
As a result, the company’s share price gradually began to reflect the BTC price. Saylor’s company derives most of its value from the quantity of bitcoins it holds. And this strategy may well prove paying in the coming years for Saylor.
Indeed, we are now less than a year of Bitcoin’s halvingscheduled for April 2024. Every four years, the quantity of new Bitcoins created is halved. As a result, producing bitcoins becomes twice as complicated, and the scarcity of this « digital gold » increases mechanically. As a result, if demand continues to grow, but supply becomes scarce, the price of Bitcoin will inevitably rise.
On-chain analysis estimates thatafter halvingthe price-floor of Bitcoin could approach 28,000 dollars piece. A value just below Saylor’s average purchase price. In other words, there’s a good chance that MicroStrategy’s head will be in profit within a year.
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MicroStrategy shares inseparable from Bitcoin?
These predictions come into play when deciding whether or not to invest in the company’s stock. According to data from Berenberg Capital Marketa broker specialized in equities, the approaching halving could boost the company’s share price. Indeed, MicroStrategy’s fate now seems to be linked to that of Bitcoin. If the price of the latter rises, so should that of Saylor’s company.
Berenberg is targeting a share price of $430 for the company by then. L’MSTR share has been piling up green candles for nearly a month (+37% in four weeks), and currently stands at 407 dollars per share. However, there is nothing to suggest that the share price will continue to rise and that its correlation with Bitcoin will endure. Market risk is permanent.
« If the historical cycle established by Bitcoin’s first three halvings repeats itself with this upcoming fourth, then a pre-halving rally could begin within four months. If the rally occurs after the fourth halving and its duration is equal to those of previous rallies, then it should last until October 2025. »
Berenberg Capital Market
That’s a lot of « ifs », but it’s still an interesting analysis. But beware! When a scenario becomes too obviousthe market often tends to want to take investors by surprise. Nothing is ever straightforward in the markets, and the majority must lose for a minority to win. In fact, chances are that at some point, Bitcoin cycles will stop repeating themselves in such a predictable way.
For Berenberg Capital, if the Bitcoin is producing a new bull run, it should take the price of theMicroStrategy share. The correlation between the two assets now exceeds 90 %. Michael Saylor took a gamble in 2020 to protect himself from inflation. He bet on Bitcoin. A choice sometimes decried, but one that could indeed in the years to come..
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