The US Federal Reserve will announce its policy decision on January 29 .
Rate cuts are generally positive for Bitcoin, as they make bonds less attractive and encourage investors to look for higher returns in riskier assets such as cryptocurrencies.
Even if the Fed does not lower interest rates today, a Mizuho Analyst is still convinced that MicroStrategy Inc. (NASDAQ: MSTR), a computer technology firm that has transformed itself into a Bitcoin proxy, is a “buy”.
MicroStrategy’s stock has almost tripled in the last five months.
Stocks of MicroStrategy could rise another 52%
Dan Dolev took over coverage of MicroStrategy Inc. on Wednesday with an “outperform rating”.
His $515 price goal indicates that there is potential for a further 52% increase from current levels.
The analyst said that the expectation that MSTR would continue to buy Bitcoin, combined with the expectation of Bitcoin’s price appreciation, gives MSTR a premium over the underlying value for its Bitcoin holdings.
Mizuho is bullish about MicroStrategy’s stock, as it expects Bitcoin growth to be at a rate of 30% annually, but with significant volatility through 2027.
BTC is currently just above $100,000. Many experts, such as Geoffrey Kendrick from Standard Chartered, believe it will reach $200,000 by the year’s end.
MSTR is more attractive in the Trump administration
Dan Dolev believes that a limited supply of Bitcoin will help it command a higher rate in the future.
The Mizuho analyst also expects that the world’s biggest cryptocurrency by market capital will benefit from President Trump’s continued delivery on his promise to create a crypto-friendly government.
Bitcoin’s intrinsic value is not high, but the price of Bitcoin has been rising due to a number of factors, including global adoption, a slowing growth rate in Bitcoin supply, and favourable political conditions.
He added that MicroStrategy’s stock is even more attractive at this point in time because of the corporate structure which allows MSTR to issue convertible bonds and equity to grow its Bitcoin holdings immediately.
How many Bitcoins does MicroStrategy have?
Mizuho’s bullish forecast for MicroStrategy comes just days before the company reports its financial results for the quarter.
It is expected to lose 12.50 cents per share, compared with 56 cents in earnings per share for the same quarter of last year.
Mizuho, however, is not the only investment company that has a positive view of MSTR.
Compass Point recommends purchasing MicroStrategy ahead of the Fed rate decision and the company’s earnings. It also points out a potential $550 upside over the next year.
The Nasdaq listed firm increased its Bitcoin holdings by 10,107 more earlier this week.
According to a recent tweet by its chairman Michael Saylor, MicroStrategy owns 471,107 Bitcoins in total.
This post Why this Bitcoin-based proxy is a “buy” even if the Fed keeps rates unchanged today may be updated as new information becomes available
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