TLDR
- Citigroup upgraded Strategy (MSTR) with a new $240 price target, up from $136, while maintaining its Buy recommendation.
- The upgraded target suggests approximately 50% potential upside based on MSTR’s October 1 closing price of $160.50.
- The bank increased its 12-month Bitcoin price projection to $113,000 from $82,000, driven by improved ETF demand trends.
- Strategy shares advanced 2.7% during Friday’s pre-market session after the announcement.
- As of September 27, Strategy’s Bitcoin portfolio totaled 847,666 BTC, purchased for a cumulative $63.95 billion.
Shares of Strategy (MSTR) advanced 2.7% during Friday’s pre-market session. The uptick followed Citigroup’s decision to boost its price objective on the Bitcoin-focused company to $240 from a prior $136.
The bank reaffirmed its Buy recommendation alongside the upgrade. Based on MSTR’s October 1 close at $160.50, Citigroup’s revised forecast indicates around 50% potential appreciation.
The adjustment stems from a broader recalibration. Citigroup elevated its 12-month price expectation for Bitcoin to $113,000, up from an earlier $82,000 projection.
The firm also increased its ether estimate to $3,028 from $2,240. Analysts cited improved crypto market dynamics and more consistent ETF capital flows as catalysts behind the revisions.
Breaking Down Citigroup’s Valuation Framework
The bank’s analysis divides the upside into distinct components. Approximately 34% stems from the elevated Bitcoin price forecast. An additional 16% derives from the projected expansion in Strategy’s valuation multiple relative to net asset value, referred to as mNAV.
Citigroup increased its Bitcoin Yield Multiple assumption to 4.0x from 2.5x. This change drove the implied mNAV to 1.24x, up from 1.065x in the previous model.
The bank observed that mNAV has historically fluctuated between 1.25x and 1.50x during periods when Bitcoin traded above $85,000 to $90,000. However, analysts applied a more conservative estimate due to Strategy’s expanding cash position, which they described as reducing per-share Bitcoin concentration.
This represents a reversal from Citigroup’s earlier stance. The firm had previously reduced its target to $136 from $260 in 2026 following a downward revision to its Bitcoin outlook. Friday’s action partially restores that reduction.
Factors Supporting the Cryptocurrency Recovery
Digital asset markets have posted substantial gains recently. Bitcoin has climbed nearly 40% during the trailing three-month period, while ether has surged approximately 68%, based on CoinGecko figures.
These advances have trimmed both cryptocurrencies’ year-to-date declines to roughly 4% and 9%, respectively. A weaker U.S. dollar, following Treasury purchases of longer-maturity bonds, has provided additional support.
U.S. spot Bitcoin ETFs recorded approximately $5.7 billion in net redemptions through mid-July. Since then, flows have reversed to positive territory, with Citigroup projecting an additional $5 billion in net accumulation over the coming year.
Legislative developments have been mixed. The Senate did not advance the Clarity Act, limiting near-term prospects for comprehensive market-structure reforms.
However, subsequent regulatory guidance from the SEC helped offset some investor concerns. The net impact on sentiment has been largely neutral to date.
Meanwhile, Strategy continues expanding its Bitcoin reserves. According to the company’s September 28 Form 8-K filing, it acquired 1,665 BTC between September 21 and 27 at an average cost of $85,681 per coin.
These acquisitions were financed through Class A common stock offerings. The company’s aggregate holdings now stand at 847,666 BTC, accumulated for $63.95 billion at an average basis of $75,437 per Bitcoin.
The filing also disclosed a USD Reserve of approximately $5.02 billion alongside $1.00 billion in cash. Strategy has continued buying back its variable-rate preferred shares using proceeds from at-the-market equity sales.
Earlier in September, the firm purchased 950 BTC for $75.7 million using balance sheet cash rather than issuing new equity. That transaction raised total holdings to 846,000 Bitcoin at that point.
With Bitcoin hovering near $86,000 in early October, the market value of Strategy’s Bitcoin portfolio now exceeds its aggregate acquisition cost.
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