According to analysts, the “debasement trade” has returned to the market. This is a strategy in which investors shift their holdings to tangible assets or assets with limited supply to protect themselves against a weakening dollar, explains CNBC. Interest in this strategy is growing due to concerns about persistent inflation and rising U.S. national debt, which exceeded $40 trillion for the first time in early August. Shortly thereafter, the U.S. Treasury promised to increase the volume of Treasury repurchases to curb the rise in yields. This, in turn, heightened fears of the U.S. currency’s devaluation, according to oninvest.com.
As a result, the price of Bitcoin has risen 21% over the past month and, on August 24, exceeded $80,000 for the first time since May. On August 26, the cryptocurrency was trading at around $78,700.
Which Stock to Bet On
The cryptocurrency rally could boost shares of Strategy—the largest corporate holder of Bitcoin—according to Bernstein. Strategy holds approximately 4% of the global Bitcoin supply, notes CNBC. If Bitcoin continues to rise in price and the value of the company’s high-yield perpetual preferred securities recovers to $100, it may resume active token purchases, predicts analyst Gautam Chugani.
Bernstein reaffirmed its “Buy” recommendation on Strategy stock (Outperform rating), although it lowered its price target from $450 to $350. The new target implies an increase of approximately 176% relative to the August 26 closing price.
Eighteen of the 20 analysts covering Strategy recommend increasing holdings in the company. The remaining two advise holding the position, according to MarketWatch data.
