Bernstein Talks MicroStrategy Debt, Bitcoin Holdings While Berenberg Raises Price Target

MicroStrategy MSTR may sell its Bitcoin BTC/USD holdings in the event of severe price drops, particularly around the time its debt is due in mid-2025.

That's according to a report from financial adviser Bernstein, cited by Coindesk.

However, robust Bitcoin prices would enable MicroStrategy "to raise new debt or equity and redeem existing convertible notes."

Also Read: Central Banks Pen Scathing Letter On Cryptocurrencies - Challenges Outweigh Innovation

What If Bitcoin Crashes? If that happens, the value of MicroStrategy's cryptocurrency holdings would not cover its debt and certain covenants after June 2025. The company's corporate structure could face pressure from "spring forward" clauses.

These clauses could advance the debt from 2028 to 2025 or 2026.

MicroStrategy currently holds approximately 152,000 Bitcoin, which cost about $4.5 billion, with an average price of around $29,600.

The market value of MicroStrategy’s cryptocurrency assets represents about 0.78% of the total Bitcoin supply; it accounts for around 20% of the daily average BTC trading volume; and makes up 95% of the company's market capitalization.

Accounting for the debt raised to purchase BTC, it equates to about 49% of MicroStrategy's market cap.

Price Target: Berenberg Capital Markets analysts have raised their price target for MicroStrategy from $430 to $510.

The firm reiterated its "buy" rating for the company, increasing its price target due to a more favorable environment for Bitcoin's institutional adoption.

"Based on the faster-than-expected pace at which MSTR has acquired Bitcoin since we initiated coverage of the company on April 27, as well our view that the prospects for institutional adoption of Bitcoin have improved meaningfully in the interim, we are raising our estimate of the value of the company’s Bitcoin holdings as of late-April 2024 to $8.74 billion from $6.27 billion," the firm stated.

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