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With bitcoin (BTC-USD) prices on the cusp of $100,000 amid a stunning post-election rally, the search is on for top ideas in the sector for 2025.
Benchmark analyst Mark Palmer is sticking with two long-time favorites of crypto bulls: MicroStrategy (MSTR) and Galaxy Digital (GLXY.TO).
Palmer sees fair value on MicroStrategy at $650, about 68% upside from current levels. Galaxy Digital has at least 16% upside from current levels to $29, based on Palmer’s analysis.
MicroStrategy began as a software company by Michael Saylor, who has since morphed into a crypto loyalist with a net worth of about $9.6 billion on the back of his aggressive bitcoin buying at the company.
Although the software business remains robust, “the total contribution from the software company is $2 out of $650,” Palmer explained to Yahoo Finance executive editor Brian Sozzi on the Opening Bid podcast (video above; listen below).
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“There are some synergies and other reasons why the software company is supportive of MicroStrategy as a whole … but the math says that it is not significant when it comes to the valuation of the stock.”
Saylor has recently made dozens of headlines for buying up and then “hoarding” bitcoin reserves, a move “I can’t compare to many other things,” said Palmer.
“It’d be like if Target’s CEO went out and started stocking up on Tesla cars for some reason to buy so they had batteries.”
Although “strange,” his moves over the past year are akin to oil companies with reserves, and “they are valued not just based on the reserves but also the likelihood that they’re going to tap those reserves over time,” said Palmer.
“The idea is that bitcoin yield [the amount of bitcoins a company buys period-over-period divided by the company’s total diluted shares] demonstrates the amount of additional value that the company has created through its Treasury operations,” Palmer added.
Read more: Bitcoin clears another record: Is now the time to invest?
In a recent filing with the Securities and Exchange Commission (SEC), MicroStrategy said it spent $5.4 billion to acquire 55,000 bitcoins between Nov. 18 and Nov. 24, buying the bitcoin at an average price of $97,862.
MicroStrategy held approximately 386,700 bitcoins, acquired for an aggregate purchase price of about $21.9 billion and an average purchase price of approximately $56,761 per bitcoin.
“The future is digital, right? There’s a race to own cyberspace,” Saylor said in August on Yahoo Finance’s Market Domination. “That being the case, empires are built on productive property, and they’re defended by firepower, naval power, air power, nuclear power, and digital power. Bitcoin is digital power. You want bitcoin. You want to own cyberspace … It’s a good investment.”
