Bitcoin 'Trump Trade' Could Boost MSTR

Markets have been responding to the upcoming US presidential election in November, with cryptocurrencies surging as analysts question whether the rise spills over to specific stocks.

Bitcoin: The Trump Trade

Markets are starting to factor in an increased likelihood that former President Donald Trump could once again become President, with several assets gaining as a result. Of particular note is the recent rise of Bitcoin towards a 3-month high, seen as attributed to the "Trump trade". Both Trump and his running mate, JD Vance, have publicly supported cryptocurrencies in the past, raising speculation that a future Republican administration may look more favourably on cryptocurrencies through a supportive regulatory framework. This contrasts with comments made during Vice President Kamala Harris' campaign, which suggested stronger regulation of cryptocurrencies may be needed.

Bitcoin rose 11% over last week despite strength in both the US dollar and gold prices, a credible run since reaching $70,000 in June. Some analysts have come forward to suggest that Bitcoin could continue to appreciate further should Trump maintain or improve his polling position through to the November election. Standard Chartered estimated a potential upside towards $73,800 for Bitcoin "in the coming weeks" should current trends persist. Meanwhile, Bernstein provided a more optimistic potential forecast of $90,000 should Trump be reelected.

MicroStrategy's Strategy on Bitcoin

The recent rise in cryptocurrency prices is notable because they often move opposite to the US dollar. However, the potential reelection of Trump has markets considering the impact of increased tariffs on the dollar and on inflation, implying higher interest rates. Notably, cryptocurrency growth comes on top of a 3% rise in the dollar, with companies such as Riot, Marathon Digital and miners potentially benefitting.

However, Bitcoin's surge is thought to benefit MicroStrategy particularly. The tech company is now primarily focused on its CEO's strategy of buying Bitcoin using any available financial resources. MicroStrategy's recent finances have shown net losses due to falling bitcoin prices over the last quarter, with analysts expecting this to continue in the third quarter. However, Bitcoin's price increase could mark a turning point, especially if a Trump victory sustains price upside. While lower income is expected for MSTR in the near term, analysts, on average, estimate a growth of 87.80% for the current quarter, reflecting an upside in cryptocurrencies.​ In comparison, the S&P 500 growth estimates point to only a 3.10% increase.

MSTR to Records After Triangle Completion

MSTR has recently extended gains to a record high of $225 per share, breaking past the peak of $200 seen in late March. While the rise seems abrupt, it has broken out of a triangle pattern, potentially reaching the measured-move projection near $250. Should the price expand to this mark, traders may look to realise some profits, which could drive the price back down to around $120 if the triangle swings of $185 and $155 weaken. However, if support holds strong, the MSTR stock may unexpectedly surge even higher towards the round $300 mark, with interim resistances expected at rounded levels along the way.​

Source: SpreadEx / The MicroStrategy

Key Takeaways​

Bitcoin and other cryptocurrencies rose last week towards multi-month highs, seen as attributed to the potential reelection of former President Donald Trump, who has publicly supported cryptocurrencies in the past. This contrasts with Harris' comments about stronger regulation. Some analysts suggest that Bitcoin could continue to appreciate should Trump maintain or improve polling through November as analysts question whether the rise will spill over certain stocks. Companies focusing on Bitcoin, such as MicroStrategy, could benefit from its recent price increase if Trump's victory sustains the upside in Bitcoin.