“Positive Macro Factors for Bitcoin Demand Benefit MicroStrategy Shares, Reports Say” In a report released on Monday, Germany’s investment bank Berenberg stated that MicroStrategy (MSTR) is a compelling option for investors seeking exposure to the cryptocurrency sector, presenting an appealing alternative to Coinbase (COIN).
According to the report, investors who hold a negative outlook on Coinbase shares and are considering shorting the stock should consider coupling it with a long position in MicroStrategy. The report highlights that since Coinbase went public through a direct listing in April 2021, the correlation between the two stocks has been 0.96, indicating a strong relationship.
The U.S. Securities and Exchange Commission (SEC) has classified the majority of crypto tokens as unregistered securities, making both the tokens and the platforms facilitating their trading susceptible to potential regulatory actions, as stated in the note. However, the commission and other regulators have explicitly classified bitcoin (BTC) as a commodity rather than a security.
According to analysts Mark Palmer and Hassan Saleem, MicroStrategy stands out as an appealing choice compared to Coinbase due to its distinctive business model centered around acquiring and holding bitcoins. They believe that MicroStrategy offers a favorable alternative given the current market conditions.
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MicroStrategy currently possesses approximately 140,000 bitcoins, which, at the present value, is estimated to be worth around $3.8 billion.
Berenberg suggests that the factors driving the demand for bitcoin on a macro level are beneficial for MicroStrategy shares. Additionally, investor worries regarding de-dollarization, which refers to the reduced dominance of the U.S. dollar, have contributed to a more positive perception of bitcoin in recent months.
According to the analysts, recent statements made by SEC Commissioner Gary Gensler regarding Coinbase clearly indicate his belief that the company has not complied with securities laws. The analysts also mentioned that the management’s resistant attitude towards the regulatory scrutiny it has faced may further hasten the initiation of any enforcement action.
The report noted that if an enforcement action were to occur, the potential impact on Coinbase’s revenues would be significantly more significant compared to its overall revenue.
The bank has given a “hold” rating to Coinbase shares, suggesting that investors should maintain their current positions, and set a price target of $55. On the other hand, MicroStrategy has received a “buy” rating, indicating that investors may consider purchasing its shares, with a price target of $340.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.