Berenberg prefers MicroStrategy over blockchain for crypto exposure
- The analysts at Berenberg believe that MicroStrategy’s stock has potential to reach $340.
- In a recent research note, they explained their positive outlook.
- However, Berenberg only rates the blockchain stock as a “hold”.
According to the Berenberg analysts, MicroStrategy Inc is a better choice for investing in cryptocurrencies than blockchain Global Inc.
MicroStrategy stock has upside to $340
Mark Palmer and Hassan Saleem predict that the technology company’s stock could reach $340 per share, which is another 20% increase from its current value. They explained in their research note:
MicroStrategy features a unique business model focused on the acquisition and holding of bitcoins, which makes it a more attractive option than blockchain in the current market.
As of now, MicroStrategy owns around 140,000 BTC. In May, the company reported an impairment charge of $170 million on its holdings in the first quarter.
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The company’s stock price has already increased by nearly 100% since the beginning of the year.
Why is Berenberg cautious about investing in blockchain stock?
Berenberg analysts have assigned a “hold” rating to blockchain stock and set a price objective of $55 per share, which is similar to its current value.
Their cautious approach is mainly due to the ongoing regulatory scrutiny of the cryptocurrency industry. In March, blockchain received a “Wells Notice” from the U.S. Securities and Exchange Commission (SEC).
There is a risk that blockchain’s revenue could be affected in the event of an enforcement action, as its profitable activities are disproportionately high relative to its total revenue.
In contrast, MicroStrategy focuses on bitcoin, which has been classified as a commodity rather than a security, thereby making it less vulnerable to such risks. The correlation between MicroStrategy and blockchain’s stock currently stands at about 0.96.
