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With Bitcoin (BTC-USD) prices at the $100,000 mark amid a stunning post-election rally, the search for the industry’s top ideas for 2025 is on.
Benchmark analyst Mark Palmer is sticking with two old favorites of crypto bulls: MicroStrategy (MSTR) and Galaxy Digital (GLXY.TO).
Palmer sees MicroStrategy’s fair value at $650, up about 68% from current levels. Galaxy Digital has at least 16% upside from current levels to $29 based on Palmer’s analysis.
MicroStrategy started as a software company by Michael Saylor, who has since turned into a crypto loyalist with a net worth of approximately $9.6 billion thanks to his aggressive bitcoin purchases at the company.
While the software business remains robust, “the total contribution from the software company is $2 of the $650,” Palmer explained to Yahoo Finance Editor-in-Chief Brian Sozzi on the Opening Bid podcast (video above; listen below).
“There are some synergies and other reasons why the software company is backing MicroStrategy as a whole… but the math says this isn’t significant when it comes to stock valuation.”
Saylor has made dozens of headlines recently for buying up and then “hoarding” bitcoin reserves, a move that “I can’t compare to a lot of other things,” Palmer said.
“It would be like if the CEO of Target went out and started stocking up on Tesla cars for some reason so they had batteries.”
Although “strange” his moves over the past year are similar to those of oil companies with reserves, and “they are valued not only on the basis of reserves, but also on the probability of losing those reserves over time tap into,” Palmer said.
“The idea is that bitcoin generates returns [the amount of bitcoins a company buys period-over-period divided by the company’s total diluted shares] demonstrates the amount of additional value the company has created through its Treasury operations,” Palmer added.
Read more: Bitcoin Beats 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 November 18 and 24, purchasing the bitcoin at an average price of $97,862.
MicroStrategy owned approximately 386,700 bitcoins, acquired for a total purchase price of approximately $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 of Yahoo Finance’s Market Domination in August. “If that is the case, empires are built on productive property, and are 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.”
At Galaxy Digital, billionaire CEO Mike Novogratz — a former Goldman Sachs alum — has taken a page from the investment bank’s playbook, Palmer said.
Novogratz has “built a business with a similar approach to capital markets, but focused on cryptocurrency,” he said. “This is a company that enables trade and lending.”
Galaxy Digital has the potential to appeal to institutional investors looking for “all the sophistication of the biggest stores on the street,” Palmer said. “As institutional investors become more involved in crypto, Galaxy Digital will stand to benefit.”
The company has also attracted the attention of those looking to get into artificial intelligence as it expands its West Texas Helios data center.
“Suddenly you have a situation where bitcoin miners who have data centers that can be used to power AI and high-performance computing projects are incredibly valuable,” he said.
Three times a week, Yahoo Finance Executive Editor Brian Sozzi fields full of insights and chats with the biggest names in business and markets Opening bid. You can find more episodes on our videohub or check your favorite streaming service.
Grace Williams is a writer for Yahoo Finance.
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