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 struggling Bitcoin treasury firm Strategy, forecasting 61% upside over the next 12 months based on Bitcoin hitting the bank’s $181,000 price target.

Strategy is a ‘’leveraged proxy’’ for Bitcoin’s performance, the Wall Street investment bank said in an Oct. 21 research note. It set a $485 price target for Strategy shares, assuming Bitcoin hits its 12-month price forecast and the company maintains its typical premium to net asset value.

But its analysts warned that while the stock offers outsized upside in bull markets, it also magnifies downside losses. A 25% pullback in BTC, they warned, could swing Strategy’s NAV from a 35% premium to a discount and cut 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 said. ”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 comes at a tough time for Strategy, which has seen its share price slump 10% in the past month, magnifying Bitcoin’s 4% loss over the same period.

MSTR rose more than 1% yesterday but is down more than 2% in pre-market trading. 

Other crypto treasury firms are also under pressure, squeezing their ability to raise funds for more purchases. 

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

BitMine Immersion Technologies, the largest Ethereum treasury firm, has plunge 5% in the past month, while fellow ETH-focussed firm SharpLink Gaming has slumped more than 13%. 

Strategy Keeps On Buying

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

Top 10 corporate BTC holders (Source: Bitcoin Treasuries)

That’s over 12 times more than the second-biggest Bitcoin treasury firm, MARA Holdings, with its reserves of 53,250 BTC.

And it shows no signs of stopping its BTC accumulation after announcing another purchase of 168 BTC for $18.8 million on Monday.

The average purchase price was about $112,051 per BTC, Saylor said. It cost the company around $47.4 billion to acquire all of its holdings, with the overall mean price for the purchase at $74,010 BTC, Saylor added.