By
Bhushan Akolkar
April 25th, 2024
The report says that macro drivers favor MicroStrategy shares in terms of the de-dollarization of the world economy.
The German investment bank Berenberg said that investors seeking exposure to cryptocurrencies are better served if they buy the shares of MicroStrategy than those of Coinbase.
A Monday report revealed to the media said that macro factors associated with the shares of MicroStrategy Inc (NASDAQ: MSTR) give investors a higher possibility of being in profit than if they went for the shares of Coinbase Global Inc (NASDAQ: COIN). Highlighting its preference for MSTR, the Berenberg report outlined the reasons why investors should look towards MSTR as a better alternative to holding Coinbase shares in their quest to benefit from the potential of the coin market.
Short on COIN, Long on MSTR
According to the analysts, there are many investors who are bearish towards Coinbase shares and advised that they look towards MSTR as a viable alternative, not just by shorting COIN but by pairing it with MSTR to build a better-balanced portfolio that gives them the desired exposure to the coin market. It was added that it is an even better deal to short COIN while being long on MSTR.
The report stated that the correlation between MSTR and COIN is 0.96, referencing April 2021, when Coinbase went public through a direct listing. The MicroStrategy advantage stems from the fact that the company’s business model involves the direct acquisition of bitcoins, adding that with the currency regulatory environment, it is a better model than what is obtainable at Coinbase.
MicroStrategy Owns 140,000 BTC
MicroStrategy currently owns 140,000 Bitcoins, valued at $3.8 billion based on the current market price. The report says that macro drivers favor the company’s shares in terms of the de-dollarization of the world economy, which the company implies could lead to the weakening of the US economy. It added that the weakening of the USD is beginning to cast BTC in a positive light among many investors.
Despite this, the US Securities and Exchange Commission (SEC) has maintained that crypto tokens are unregistered securities. The regulator and others in the United States have moved against platforms that trade on these assets in recent months. It is interesting to note that the blanket classification excluded Bitcoin, which the regulators deem a commodity, unlike most other cryptocurrencies.
Coinbase May Face Enforcement Action
Crypto trading platforms such as Binance.US and, more recently, Coinbase are in the sights of regulators. SEC Commissioner Gary Gensler is of the opinion that Coinbase does not comply with US securities law. The Berenberg report noted that the defiant stance of Coinbase management will not help the company’s cause but will rather accelerate enforcement actions against it.
“Coinbase’s revenues at risk in the event of an enforcement action are disproportionately profitable relative to its total revenue,” the report added.
According to the investment bank, Coinbase shares’ hold rating price target is $55, while MicroStrategy shares have a buy rating price target of $340.