Needham Downgrades GBTC Rating, But Predicts Bitcoin Rally to $848

Needham & Company has revised its bitcoin price projection as well as its outlook on the Bitcoin Investment Trust (OTCQX: GBTC). The firm sees improvement in bitcoin’s fundamentals, but not in GBTC, downgrading the firm’s rating from “Buy” to “Hold.”

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Needham Sees Improved Bitcoin Fundamentals

Needham & Company is the investment banking and asset management arm of the Needham Group, Inc. The firm announced that it has a positive outlook on bitcoin.

“Due to faster-than-expected adoption and improving fundamentals,” analyst Spencer Bogart said in a statement, “we are raising our Bitcoin price projection (from $655 to $848).”

Bogart highlighted three encouraging factors behind his forecast. Firstly, he observes that bitcoin adoption is trending faster than he predicted back in March. Secondly, bitcoin’s fundamentals are improving. “There are upcoming protocol improvements that we think present attractive optionality for the price of Bitcoin,” was his last reason for raising his price target for the digital currency.

He concluded that:

“At the highest level, we continue to see value in Bitcoin as a “digital gold” and as a payment network that is enabling a global, open, permissionless financial system.”

GBTC Downgraded

While confident in the performance of bitcoin, Bogart is less optimistic about the performance of GBTC.

GBTC is a private, open-ended Trust investing exclusively in Bitcoin. Its shares are publicly quoted over-the-counter on OTCQX under the Alternative Reporting Standards.

GBTC is sponsored by Grayscale, a wholly-owned subsidiary of Digital Currency Group (DCG). Founded by Barry Silbert, DCG is one of the most active investors in bitcoin and blockchain technology companies. So far, the company has made over 85 investments in 25 countries, according to its website.

With the revised bitcoin price projection, Needham also downgraded GBTC shares from a “Buy” recommendation to a “Hold.” Bogart said the reason for the downgrade comes from “the substantial premium at which shares trade relative to their net asset value.”

GBTC Coverage Initiated with a “Buy”

In March, Needham initiated coverage of GBTC.

Bogart, covering Internet and Financial Technology sector, recommended “Buy” with a price target of $62 at that time.

What do you think of Needham’s forecasts? Let us know in the comments section below.

Images courtesy of Needham, GBTC.