German Investment Bank Paints Hopeful Picture for Bitcoin

According to a research report by investment bank Berenberg, it is possible for Bitcoin (BTC) to emerge from the period of declining market activity often referred to as the “crypto winter” and outperform in the coming months. The author of the report, Mark Palmer, attributed this to the imminent Bitcoin halving event, which will first and foremost cut the production of new coins in half. He also drew attention to rising regulatory risks in the US. According to the analysis, the fact that each token is at risk of being labeled as an investment contract and subject to a sanction action could make Bitcoin stand out more.

Berenberg, a Hamburg-based multinational investment bank, said the possibility could be attributed to a combination of factors such as circumstances, evolution and timing. As is known, the halving process, called “halving”, reduces the rewards received by miners by 50 percent. Currently, miners earn 6.25 BTC rewards per block, which will increase to 3,125 next spring. Throughout history, Bitcoin halving events have been linked to a notable increase in the asset’s value. Berenberg stated that the upcoming halving event will follow this trend. On the other hand, he also predicted that the halving event could potentially act as a catalyst for MicroStrategy shares, which currently have the largest amount of Bitcoin reserves at around 140,000 BTC.

Bitcoin price has risen about 65 percent since the beginning of the year, while MSTR has increased by almost 120 percent during this time.

Berenberg argued that the recent rise in the value of Bitcoin can be seen as an indication that investors are accepting it as a sensible alternative, not only in the cryptocurrency space, but also in the broader context of global finance. According to the report, the banking crisis that occurred earlier this year had a lasting impact on traditional finance. It was also alleged that the perception that the Fed mismanaged the interest rate cycle led to a loss of confidence among investors.

The bank reported that these macro factors have raised concerns about ‘dedollarization’, the process of reducing or eliminating the use of the US dollar in international trade and financial transactions. It was said that this development could underline Bitcoin’s value proposition as an alternative currency. The report stated that MSTR shares could also benefit if “investors turn to Bitcoin as an alternative currency.” Finally, it was emphasized that while Bitcoin is defined as a safe haven compared to other cryptocurrencies, this advantageous location could potentially lead to an increase in demand for it.