Why this Bitcoin proxy is a ‘buy’ even if the Fed holds rates steady today
The US Federal Reserve is broadly expected to leave its key rate unchanged as it announces its policy decision on Wednesday, January 29th.
Rate cuts tend to be meaningfully positive for Bitcoin as they make bonds and saving accounts less attractive, making investors look for better returns in the risk-on assets like cryptocurrencies.
Still, a Mizuho analyst remains convinced that MicroStrategy Inc (NASDAQ: MSTR) – a computer technology company that’s transformed itself into a Bitcoin proxy is a “buy” even if the Fed doesn’t lower interest rates today.
Note that MicroStrategy stock has already close to tripled over the past five months.
MicroStrategy stock could rally another 52%
Dan Dolev assumed coverage of MicroStrategy Inc. with an “outperform” rating on Wednesday.
His $515 price target indicates potential for another 52% upside from current levels.
“Anticipation that MSTR will continue buying Bitcoin, coupled with expectations of Bitcoin price appreciation, grants MSTR a premium to the underlying value of its Bitcoin holdings,” the analyst told clients in a note today.
Mizuho is bullish on MicroStrategy stock as it expects Bitcoin to grow at a compound annualized rate of up to 30%, albeit with significant volatility, through the end of 2027.
At writing, BTC sits just above the $100,000 level – with many experts, including Geoffrey Kendrick of Standard Chartered, seeing it hitting $200,000 by the end of this year.
MSTR is more attractive under the Trump administration
Dan Dolev is confident that limited supply will help Bitcoin command a higher price moving forward.
Additionally, the Mizuho analyst expects the world’s largest cryptocurrency by market cap to benefit as President Trump continues to deliver on his promise of a pro-crypto government.
While Bitcoin itself lacks intrinsic value, rising global adoption, slowing rate of Bitcoin supply growth, and favourable political environment support price appreciation.
The corporate structure that enables MSTR to issue equity and convertible bonds to immediately grow its Bitcoin holdings makes MicroStrategy stock all the more attractive to own at writing, he added.
How many Bitcoins does MicroStrategy hold?
Mizuho’s bullish call on MicroStrategy shares arrives only days before the company is scheduled to report its financial results for the fourth quarter.
The consensus is for it to lose 12.5 cents a share versus 56 cents per share of earnings in the same quarter last year.
Still, Mizuho is not the only investment firm that’s positive on MSTR.
Compass Point also recommends buying MicroStrategy stock ahead of the Fed’s rate decision as well as the company’s earnings and points to a potential upside of $550 over the next 12 months.
Earlier this week, the Nasdaq-listed firm expanded its holdings by another 10,107 Bitcoin.
In total, MicroStrategy now owns a whopping 471,107 Bitcoin, according to its chairman Michael Saylor’s recent tweet.
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