As a seasoned researcher with over two decades of experience in the financial markets, I find MicroStrategy’s Bitcoin strategy intriguing and bold. The company’s ambitious plan to acquire 4% of all circulating Bitcoins within the next ten years is reminiscent of the gold rush days, where fortune seekers staked their claims on promising land.
MicroStrategy’s bold approach towards Bitcoin is gradually materializing, and financial experts at Bernstein speculate that, over the next decade, the company could amass around 4% of the total circulating Bitcoin supply.
Currently, the business intelligence company has amassed approximately 331,200 Bitcoins, valued at around $96,391 each. This 24-hour volatility stands at a mere 0.3%, while the market capitalization of Bitcoin totals an impressive $1.91 trillion. The 24-hour trading volume amounts to $74.12 billion. Initially, the firm acquired these Bitcoins at an average price of $49,874 per coin. With its current holdings accounting for 1.7% of the total Bitcoin supply, the company’s intention to further expand its Bitcoin reserves could support such forecasts.
As an analyst, I’m sharing my perspective based on our Monday note to clients. Led by Gautam Chhugani at Bernstein, we commend MicroStrategy for their unique approach towards Bitcoin acquisition. In essence, MicroStrategy is a company that seems determined to pull in billions from the global market to invest in Bitcoin.
Currently, Bernstein analysts have revised their projected price for MicroStrategy Inc (NASDAQ: MSTR) shares. This adjustment is made considering the company’s past Bitcoin purchases and their intention to carry on with this approach.
According to the latest projection by Bernstein, Mastercard’s (MSTR) stock price could potentially increase by approximately 42%, rising from its current value of $421.88 to reach around $600 by the year 2025.
Why Analysts Are Bullish on MicroStrategy Bitcoin
It could be helpful to point out that the positive outlook expressed by Bernstein analysts stems from three key aspects.
Initially, they examine if investors hold more Bitcoin in a long position (owning more than they borrow) or short position (borrowing more than they own). Additionally, they factor in whether MicroStrategy might face liquidity issues or bankruptcy risks. Lastly, they assess the company’s potential to expand its capital resources sustainably over an extended period.
According to Bernstein analysts, it appears that the period of rising prices for Bitcoin (Bitcoin bull market) could be lasting longer. This prolonged rise in price seems to be happening alongside growing acceptance among institutions, supportive regulations, and advantageous macroeconomic conditions such as low-interest rates and reduced risks of inflation.
As a crypto investor, I’ve noticed that while Bitcoin can be quite volatile, MicroStrategy’s approach using convertible debt seems to minimize potential risks to their financial health. In simpler terms, even though Bitcoin’s prices can swing wildly, MicroStrategy has designed their financial model in such a way that they are shielded from significant instability on their balance sheet due to this volatility.
To wrap things up, the company managed to secure a staggering $9.6 billion through both debt and equity this past month. This significantly surpasses its goal of raising $42 billion over the next three years. Given this speedy progress, it’s anticipated that the target will be met within the following 18 months. With just $32.4 billion worth of potential acquisitions left on the table, the future looks promising.
MicroStrategy aims to accumulate around 830,000 Bitcoins by the year 2033, assuming each Bitcoin is valued at $1 million in Bernstein’s base-case scenario. This would equate to a mind-blowing $830 billion in Bitcoin holdings.
A Little Dose of Skepticism
It’s worth mentioning that while Bernstein expresses a lot of positivity towards MicroStrategy, especially with regards to their Bitcoin investments, not everyone feels the same level of excitement about this topic.
For example, recently, Citron Research expressed concern about the quick increase in MicroStrategy’s MSTR stock, suggesting that this growth might not be grounded in the fundamental aspects of Bitcoin (BTC).
Significantly, Citron’s doubts caused a 20% decrease in MicroStrategy’s shares last week. Yet, with Bitcoin being traded at approximately $98,629 and MicroStrategy’s stock experiencing an increase of over 500% this year, it seems that MicroStrategy’s aggressive investment in Bitcoin is proving to be profitable. This is true even amidst occasional market doubts.
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2024-11-25 19:01