MicroStrategy (MSTR) Share Tanks 25%, Recovery Soon after Bitcoin Halving?

MicroStrategy (NASDAQ: MSTR), the world’s largest corporate Bitcoin holder, saw a sharp decline in its share price tanking over 25% this week. This MSTR price pullback coincides with the Bitcoin (BTC) price slump in recent times. Amid its strong Bitcoin purchases, the MSTR stock has been running at three times the speed of Bitcoin. While the BTC price gained 50%, the MSTR stock price rallied by a staggering 150% until the recent correction started.

MicroStrategy Bounce Back Likely AfterBitcoin Halving?

Analyst Andrew Harte raised his price target on MSTR stock to $1,800, suggesting that the shares could potentially rise by at least another 10% from their recent trading levels. This upward revision marks a significant increase from his previous target of $780.

MicroStrategy’s stock has outpaced Wall Street’s expectations over the past month, as its shares surged alongside the remarkable rise of Bitcoin. With the company holding more than 214,000 Bitcoins as of March 18, its stock has mirrored the upward trajectory of the leading digital asset, even surpassing its gains.

Despite this surge, the price targets set by the four analysts tracked by Bloomberg still fall short of the stock’s intraday record high of $1999.99 reached in March. Harte noted in a client memo that the premium investors are willing to pay for the company’s exposure to Bitcoin has stabilized at a new level above 2x, based on a sum-of-the-parts analysis. He added:

“We also expect the company to benefit from Bitcoin catalysts during the coming year, specifically the Bitcoin halving event estimated to take place this month”.

Bitcoin Halving to Boost MSTR?

In just two weeks from now, the Bitcoin blockchain will undergo the much-awaited Bitcoin halving event which will reduce the supply by 50% and block rewards from 6.25 BTC to 3.125 BTC. It is indeed clear that the MSTR stock price has been trading at a much higher premium than Bitcoin.

Harte’s analysis presents both the potential upsides and downsides for MicroStrategy. In the event that the premium diminishes and regulatory pressures impact the cryptocurrency market, potentially causing Bitcoin to regress towards $48,000, Harte estimates that shares could decline to $700.

However, in a bullish scenario where Bitcoin surpasses $90,000 and the premium on the company’s holdings increases, Harte predicts a stock price of $2,700, representing a substantial gain of nearly 70% from its current trading level. In the meantime, the upcoming April halving is anticipated to serve as a positive catalyst for both the stock and the price of Bitcoin. Harte said:

“Following the prior three halving events, the price of one BTC has increased by 80x, 4x, and 6x during the following year. As such, we believe investors view Bitcoin as a safe haven from inflation in the face of fiscal stimulus from central banks, and we expect continued adoption from institutional investors as Bitcoin serves as a disinflationary asset.”