Citi Says ‘Buy’ Michael Saylor’s Struggling Strategy, Sees 61% Upside On $181K Bitcoin Target

Citi has assigned a "Buy" rating to Michael Saylor’s Bitcoin treasury firm Strategy, forecasting a 61% upside over the next 12 months, contingent on Bitcoin reaching the bank’s $181,000 price target.

In an Oct. 21 research note, the Wall Street investment bank described Strategy as a "leveraged proxy" for Bitcoin’s performance. Citi set a $485 price target for Strategy shares, based on the assumption that Bitcoin will hit its 12-month price forecast and the company will maintain its typical premium to net asset value.

However, Citi analysts cautioned that while the stock offers amplified upside potential in bull markets, it also magnifies downside losses. They warned that a 25% pullback in Bitcoin could shift Strategy’s net asset value from a 35% premium to a discount, potentially reducing the stock's value by as much as 61%.

“The stock presents significant risks due to its positioning as a leveraged proxy for Bitcoin,” Citi analysts stated. “Its value is nearly 100% tied to the sometimes-volatile cryptocurrency, meaning that even a moderate decline in Bitcoin’s price can lead to magnified losses for MSTR shareholders.”

Crypto Treasury Firms Face Turbulent Times

Citi’s buy recommendation arrives during a challenging period for Strategy, whose share price has declined by 10% in the past month, outpacing Bitcoin’s 4% loss over the same timeframe.

Strategy’s stock rose more than 1% yesterday but is currently down more than 2% in pre-market trading.

Other crypto treasury firms are also experiencing pressure, which is impacting their ability to raise funds for further acquisitions.

Japan-based Metaplanet has seen its stock price fall by over 27% in the past month. This led CEO Simon Gerovich to announce that the firm has paused its share issuance as part of an initiative to optimize the company’s fundraising strategy.

BitMine Immersion Technologies, the largest Ethereum treasury firm, has experienced a 5% drop in its stock price over the past month, while fellow ETH-focused firm SharpLink Gaming has slumped by more than 13%.

Strategy Continues Bitcoin Accumulation

Strategy began accumulating Bitcoin in 2020 and has since become the largest corporate Bitcoin holder globally. According to data from Bitcoin Treasuries, Strategy currently holds 640,418 BTC on its balance sheet.

This holdings figure is more than 12 times larger than that of the second-biggest Bitcoin treasury firm, MARA Holdings, which holds 53,250 BTC.

Strategy shows no signs of halting its Bitcoin accumulation, having recently announced another purchase of 168 BTC for $18.8 million on Monday.

Michael Saylor stated that the average purchase price for this acquisition was approximately $112,051 per BTC. He also added that the company has spent around $47.4 billion to acquire all of its current holdings, with the overall average purchase price standing at $74,010 per BTC.