MicroStrategy could be an attractive alternative to Coinbase for investors looking to gain exposure to the crypto sector, German investment bank Berenberg says. said in a March 22 report.
Investors who are extremely bearish on Coinbase stock and are inclined to short the stock should consider pairing it with MicroStrategy’s longs, the report said, citing Coinbase’s April 2021 It points out that the correlation between the two stocks since going public is 0.96.
The U.S. Securities and Exchange Commission (SEC) has classified most cryptoassets as unregistered securities, making cryptoassets and the platforms that enable them to trade vulnerable to further regulatory action, but Bitcoin ( BTC) is the only one classified by the SEC and other regulators as a commodity rather than a security, the report said.
Analysts Mark Palmer and Hassan Saleem said, “Characterized by a unique business model focused on acquiring and holding Bitcoin, MicroStrategy is well placed to grow the coin in the current environment. We believe it will be an attractive alternative to the bass.”
MicroStrategy currently holds 140,000 BTC worth about $3.8 billion at current prices.
Berenberg said the macro factors driving bitcoin demand are bullish for MicroStrategy stocks, and investor concerns about a de-dollarization (US dollar weakening dominance) have turned into a more positive spot for bitcoin in recent months. He says it led to turning on the light.
SEC Chairman Gary Gensler’s recent comments on Coinbase reflected his view that the company has not complied with securities laws and management’s “challenging attitude” to the scrutiny the company has received. ‘ leaves no doubt that some legal action will be taken, analysts said.
“Coinbase’s earnings at risk in enforcement are disproportionately profitable relative to its total earnings,” the report adds.
The bank has a Hold rating on Coinbase stock and a $55 price target. MicroStrategy, on the other hand, has a Buy rating with a price target of $340.
｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Original: MicroStrategy Shares Offer Better Exposure to Crypto Than Coinbase: Berenberg